European investment in private equity hit an all-time high of £30bn last year - a rise of 89pc on 1999 - with pension funds leading the way. According to the study for European Private Equity and Venture Capital Association (EVCA) by PricewaterhouseCoopers, UK private equity investment increased by 79pc last year. The UK figure of £8bn set a record for the seventh year in succession, an increase of 6pc over the 1999 total of £7.6bn.
European pension funds overtook banks as the number one private equity investor with 24pc of the total invested, up 125pc from 1999. In total pension funds made up 40pc of the UK private equity market with UK pension funds increased private equity investment, reversing a previous downward trend.
Over 60pc of total funding in the UK market came from overseas with US pension funds comprising the largest single investor. Fund of funds also made a large gain with five-fold increase to 11pc of new money and 13.6pc of the UK market.
The EVCA report said: “The strong performance of the domestic economy in 2000, the continuing improvement in the entrepreneurial environment, the AIM secondary stock, the rapid growth in the number and size of buyouts in previous years, have contributed to the development of the UK private equity industry.”
High technology drove the private equity market last year, with £6.75bn invested in the sector last year, 71pc more than in 1999.
Dot.com mania drove activity in the early quarters of last year, with £1.56bn in total invested in technology companies. The number of high technology investments accounted for 66pc of the total number of investments. Wireless developments such as WAP and 3G licences helped to keep levels of venture capital high later in the year.
By Alistair Graham
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