UK Turnaround Investors’ Firepower Hits £8bn

June 12, 2012 /

The UK turnaround investor community, which has secured numerous high profile distressed business deals in the past year such as Sun European’s acquisitions of Bonmarché and Alexon and Better Capital’s acquisition of Jaeger, has £8bn of liquid funds available to invest according to latest research from KPMG.

Will Wright, restructuring director at KPMG, commented: “As companies falter under the economic strain, the turnaround investor community has become a prominent source of rescue cash. Even the most distressed businesses may have a viable part which can be salvaged. While there have always been turnaround investors, which are akin to private equity but differentiated by their ability to write a cheque on the spot and their background in corporate restructuring, the group has grown substantially since 2008.

“We conducted our first analysis of UK turnaround investors last year and found that the group numbered around 60 and had around £1bn of firepower. This year, we have seen an increase in the number of investors to around 75 but, moreover, have tracked an eight fold increase in investment potential, with the group telling us it has over £8bn of liquid capacity. A great deal of turnaround investor money is sourced from high net worth individuals; this dramatic increase in funds shows that the UK’s wealthy individuals are increasingly looking to invest in rescue deals.

“However, our research has also shown that the turnaround investor group is selective on which companies they seek to support. While the investors identified an average of over 200 opportunities in the last year, they typically only followed up around a quarter of these (48 on average). There is cash out there for companies in distress but turnaround investors will only invest where they perceive there is some hope of rescuing some part of the business. With the vast majority of the group (86%) expecting Eurozone conditions to worsen and more distressed investment opportunities to arise, we believe this group of investors is an increasingly important source of cash in the UK’s recovery story.”

KPMG has identified around 75 specialist turnaround investors active in the UK (up from 60 last year). The group has completed 95 deals in the past 12 months (up from 73 deals the year before). The group has divested 42 businesses in the last 12 months.

The group has invested £1.1bn in UK headquartered businesses in the last 12 months (compared with over £940m the year before); 69% of turnaround investors have completed a solvent acquisition in the last 12 months (compared with 76% last year); 94% of turnaround investors expect to see more opportunities in the next year; 86% expect Eurozone economic issues to deteriorate in the next 2 years.


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