Wales has seen a rise in equity investment deals involving small and medium-sized firms but their overall
value have fallen, according to new research from the British Business Bank.
The economic regeneration bank of the UK Government said deal numbers in the Welsh marketplace increased by 19% in 2022 compared to the previous year with 70 deals –representing 2.6% of the 2,702 investments across the UK.
The bank’s annual Small Business Equity Tracker, now its ninth year, also shows that on the value of deals there was a decline in Wales 10% on 2021 to £82m.
This represented just 0.5% of the total UK equity injection into SMEs of £16.7bn. Both on number of deals and value, London and south east of England cotinue to dominate. On the number of deals they accounted for nearly 60% of the UK number with 1,595, while on value ( £12.5bn) it was nearly 75%.
The number of UK-wide announced equity deals fell by 7% in 2022 with the total value declining 11% to £16.7bn, driven by a downturn in market conditions.
On an increase in the number of deals, as well as Wales, the only other parts of the UK to see a rise were the south west and Yorkshire and the Humber. On value of deals only the south east, Scotland, Northern Ireland and Yorkshire and the |Humber reported a rise.
The data demonstrates the first annual drop in equity deal volumes since the Beauhurst data series began in 2011.
Susan Nightingale, director UK network, British Business Bank, said: “In Wales we’re seeing a mixed picture for small business equity investment, more so than in other nations and regions which tell a more linear story, be that positive or negative.
”Deal volumes are up – significantly so – with Wales seeing the largest increase in deal volume of any nation or region across the UK, with most other areas witnessing volume decreases. However, this is tempered by a decrease in investment value of 10%. Although it’s worth pointing out that this is the smallest decrease of the nations and regions who also experienced a fall in investment values.”
Nearly a third of Wales’ equity deals were supported by government funding. This compares to 52% in Scotland and 39% in Northern Ireland – with 12% for the UK.
The figure in Wales is lower as Beauhurst classifies some equity deals from the Development Bank of Wales, which is wholly-owned and funded by the Welsh Government, as being private.
If reclassified as government funded, the British Business Bank report says the level in Wales would be 53%.
In a move that will further boost its equity activity, British Business Bank is expected to launch a new £130m Wales fund this autumn.
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