BVCA reports on portfolio companies

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The British Private Equity and Venture Capital Association (BVCA), in collaboration with Ernst & Young, has published its first annual report on the performance of portfolio companies.

The study was conducted as part of the implementation by the private equity industry of the Walker Guidelines. It looked at 28 portfolio companies in private equity ownership from 2003 to 2007, totalling at an aggregate of £56bn in enterprise value, of which £15bn was equity. The report also looked at 14 exits which represented businesses acquired for an aggregate value of £18bn and exited in the period 2005-2007.

The survey found that growth in productivity amounted to approximately 7.5% per year. Employment growth was 1%, which is comparable to the employment growth figure in the UK economy overall. Although the dataset is not large enough to draw substantial conclusions, the report notes that 14 exits delivered an aggregate return of 3.3x, which is 330% of the return achieved by investors in the FTSE All Share.

The selection was based on three criteria: an enterprise value of more than £500m; more than 1,000 full-time equivalent employees in the UK; and more than 50% of revenue generated in the UK.