Majority find it ‘easy’ to obtain finance for growth. Big increase in demand for equity – dramatic increase in companies considering flotation and Private Equity demand at record highs. Bank funding is more readily available. Majority want UK to remain in the EU but feel unaffected by the proposed referendum. Coalition approval back to net positive.
ECI Partners, the UK growth-focused mid-market private equity firm, launches the results of its 2013 Growth Survey (the only UK survey focused exclusively on growth companies) today which shows a dramatic improvement in funding conditions for UK growth companies. ECI’s poll of over 650 growth companies shows companies are finding it easier to tap bank funding, with a significant increase in companies looking to public markets and private equity to provide capital, reflecting a wider improvement in the UK economy and growing equity culture.
David Ewing, Managing Partner at ECI Partners, said: “The importance of growth companies cannot be overstated, as they play an essential role in creating jobs and boosting UK prosperity.” “ECI has experienced first-hand the impact of the improving economy on growth businesses, with double-digit increases in revenue, profit and headcount across our portfolio, and three successful exits over the last twelve months. But plenty more can still be done: many successful growth companies are sceptical about sources of finance. Investors like ourselves, the banks and public market investors need to work harder to explain the benefits and added value we can bring to these companies to help them maximise their potential.” ECI Partners polled over 650 UK companies in summer 2013. ECI Partners Growth Survey 2013: The main findings. 54% of companies polled said they expected it to be ‘easy’ or ‘very easy’ to obtain growth finance over the next 12 months, up from 36% in 2012. 57% would look to private equity, up from 40%. 41% said they would likely look to public markets to finance growth- up from 9% in 2012. Appetite for bank debt remains consistent with last year – 58% – said they would likely use bank finance to fund their growth, marginally up from 57% in 2012.
Drivers of growth
The survey’s findings also show signs of improving economic confidence: the vast majority of companies polled by ECI– 73%- are looking to fund growth initiatives over the next 12 months. New product markets are expected to be the biggest driver of growth for 38% of respondent. International expansion: 36% view entry into new countries as a key driver of growth, as the UK economy awaits terminal velocity. 31% see investment in staff as an additional key driver. Companies are shrugging off concerns about Europe’s continuing debt crisis: the Continent remains the number one international market for 56% of respondents, up from 43% in 2012, and ahead of Asia Pacific & China, (51% vs. 39% in 2012), North America (35% vs. 40%), and India (23% vs. 17%)
EU- in or out?
Europe’s importance as an overseas market means companies want the UK to remain within the EU: the survey results show a strong majority- 59%- believe membership is ‘important’ or ‘vital’ to their business. 32% said that continuing EU membership was ‘irrelevant’ to their business, with 5% said it was ‘harmful’. However 51% believe the UK Government’s decision to hold a referendum on the country’s membership of the EU will have “no impact on their business” with the balance split between positive (28%) and negative (21%). Overall, the survey results also show that companies are feeling more positive about the Coalition Government with a net positive rating of 15% compared to net negative of 3% in 2012 (but still down from a high of 30% net positive in 2011). But companies also say the Government could do more to help them, including reducing taxation.
