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South east swallowing up 75% of UK equity investments

Companies in London, the South East and the East of England receive 75% of all UK equity investments, new research has revealed.

Researchers at the University of Leeds and Imperial College London studied equity finance deals into small to medium-sized enterprises (SMEs) and high-growth firms (HGFs) across the UK between 2011 and 2017.

An exception was Scotland, which saw the highest number of deals outside of the South-East, although the overall amount invested remained relatively modest.

In 2017 the overall equity gap, which is the total shortfall of equity funding in the economy, was about £10.5bn.

The equity gap was greatest in the East Midlands, where the potential demand for equity investment among eligible businesses was about £560m, while actual investment was just £59m.

This was followed by Yorkshire and Humberside, where potential demand was £661m and investment was £96m, and the West Midlands, where potential demand was £761m and investment was £126m.

Author Professor Nick Wilson of Leeds University Business School, said: ‘Access to equity is important for fast-growing companies seeking to expand. But this research shows the challenges facing companies outside London, the South-East and the East of England to tap into that investment.

‘Funding continues to be concentrated in London and the South-East, which is detrimental to efforts to rebalance the economy. What is particularly concerning is that the concentration of equity investment into the capital are rising – London is dominant and that dominance is further growing.’

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