PE takes beachhead in Scotland's mid-market
Key investment sectors give insight into where investment is headed
Private equity may not be widespread across Scotland's mid-market, but its current sector concentrations give an insight into its future direction.
Thirteen of the 200 companies tracked in this edition carry confirmed private equity backing, a small slice of the total, but a disproportionately large one in capital terms.
Between them, these businesses turn over in excess of £489.7m and generate £62m in EBITDA, concentrated in just two sectors accounting for well over half the money.
Technology & Telecoms leads on revenue at £161.2m, with Energy Supply Chain close behind on £142.2m.
Geography follows the same pattern of concentration without domination, Edinburgh, Aberdeen and Glasgow account for ten of the 13, with Edinburgh narrowly ahead on four.
Nine of the 12 PE-backed companies with comparable figures grew turnover in their latest filed period.
Oceanscan led, turnover up 84.9 per cent, EBITDA up 43.2 per cent.
Neal Allen of HNH said appetite is increasingly concentrated in "AI-proof" business services such as fire and security or civil engineering.
He said: “Appetite is contingent on hot sectors, and invariably there are fewer Scottish businesses in any given sector just due to relative scale compared to England.
“However, there is always interest in the right asset. Currently, AI-proof business services, those with a manual element, such as fire and security or civil engineering/infrastructure, are in demand.
“However, the key to unlocking optimal equity value is understanding the particular value drivers within an industry, as the range of businesses related to any one sector can be broad.”
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