UK private equity: How scarcity, succession and specialism drive outperformance

Introduction

In our 2020 whitepaper “Brexit: Has the fog just lifted?” we suggested that investors should continue to hold a meaningful allocation to UK private equity as part of their broader European and global exposure, despite macroeconomic turmoil in the UK.

Stability has now returned, and the government has committed to supporting up to £50 billion of local investment in UK businesses and infrastructure. Under the Mansion House Accord announced in May 2025, 17 major UK pension providers agreed to invest at least 10% of their defined contribution funds into private markets by 2030, with half dedicated to UK investments. Private equity stands to benefit significantly.

In this paper, we take an empirical view of the opportunities and risks facing UK private equity and provide guidance on where to prioritize investment.

Outperformance despite macro headwinds

Using SPI, our proprietary private markets database, we analyzed the performance of 860 portfolio investments completed by 105 distinct UK-based buyout funds operating in the UK SMBO market.¹ We focused on UK-headquartered companies to isolate pure country specialists, excluding international firms with broader exposure. We benchmarked these investments against similarly sized investments across Europe.

Our analysis shows that UK private equity performance has generally been stronger than the broader European landscape on a realized basis, and also on a risk-adjusted basis given a lower loss ratio (Figure 1).

1. Small and Middle Buyout, including portfolio investments with a Total Enterprise Value at entry of less than US$1 billion.

There is also a low correlation with broader UK macroeconomic performance (Figure 2). This suggests that UK private equity returns do not reflect macroeconomic fundamentals, underscoring their distinctiveness relative to the UK’s recent modest GP growth.

It is therefore unsurprising that UK private equity has consistently outperformed public benchmarks (Figure 3). Unlike public markets, where investors gain broad exposure often tied to prevailing macroeconomic cycles, private equity managers actively select, shape, and support portfolio companies—driving value creation through operational improvements and strategic repositioning.

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