A post-Brexit world may not be all doom and gloom, as new studies suggest that foreign investment into UK businesses has been unaffected by the transition. According to a report from Barclays and Beauhurst, published on 19 August, high-growth UK companies have brought in £19bn from overseas investors over the last three years. The report includes data from over 36,000 high-growth UK companies, which generally refers to companies generating a return on equity of more than 15%. Among them, software companies were the most popular for international investors between 2011 and 2020, closely followed by internet platform, mobile app and analytics companies.
The US continues to be the UK's most prolific investors, having been involved in a record £4.5bn worth of deals in 2020 alone. With 78.5% of respondents selecting the US as the place to do business in the future, the report clearly shows that the growing attractiveness of the region for UK companies is mutual and well established. As the UK enters a post-Brexit world, it is likely that the US will only continue to grow in relevance and importance.
Most interestingly, the findings reveal that EU investments have increased in number since the referendum. In 2019, a record 151 deals were struck with EU investors, an impressive 65% increase from the 99 deals struck in 2016. Similarly, a record 77 companies were acquired by EU buyers in 2019, continuing a growth curve that had begun in 2011. Such statistics highlight the continued appeal of UK companies to EU buyers that are perhaps looking to diversify into a familiar yet distinct business arena.
Unfortunately, the pandemic did curtail these upward trends. In the year 2020, the number of transactions completed remained relatively steady but only 46 acquisitions were completed. However, as the uncertainty of the pandemic starts to subside and Britain's successful vaccine rollout continues to provide a safe environment for EU investment, the report predicts that previous trends will return in full force for the year 2021. Indeed, the fact that deals were still being done between the UK and EU despite their changing relationship speaks to the ongoing importance of the EU as a market and source of investment for the UK.