SCOTTISH private equity deal activity took a significant upwards turn in the first half of the year despite the impact of Covid-19 on the economy, according to new analysis.
Accountancy giant KPMG said that Scottish investment deals rose “considerably” in the first-half as "investor confidence returned" and vendors moved to bring assets to market.
The volume of deals across Scotland in the first half rose 54.5 per cent against first-half 2020 levels and 13.3% compared to levels in the second half of last year.
The value of deals completed in the first half of the year also rose 17.5% compared to levels seen in the same period in 2020.
It shows that “the burst of transaction activity we’ve seen in H1 is a strong indicator that the bounce-back is well under way”, said James Kergon, KPMG Scotland Senior Partner.
“A number of mid-market deals which had been held back, initially because of Brexit, and then the pandemic, finally came racing out of the blocks driving up both deal values and volumes,” he said.
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“The flurry of activity in Q1 was also fuelled by the rush to complete deals ahead of the anticipated changes to the capital gains tax regime that many expected in March 2021’s spring budget.
“In Q2, mid-market PE activity levelled off somewhat and has now returned to pre-pandemic levels, and after the last 16 months that we have had, it’s phenomenal to see activity this high, this fast.”
The first saw deal volume in Scotland rise by 12.5% on Q1 2020 levels, while in the second the volume of transactions rose by 166.7% on Q2 2020 levels. The deal value also rose significantly at 353.5%.
KPMG said momentum from the last quarter “picked up pace” in the first quarter in 2021 “as pent-up demand started being released”. It said deals that had been put on hold in summer 2020 were revived as private equity investors returned to the market with renewed appetites.
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