Navigating the future: Heligan Investments' outlook for 2024

2023 was a challenging year for the private equity market, with significant headwinds in large transactions and fundraising. However, as we transition into 2024, there's a palpable sense of optimism within the private equity community. This renewed confidence is buoyed by improving macroeconomic indicators, anticipated reductions in global interest rates, and a resurgence in public company profitability.

Fundraising challenges and opportunities: Last year saw global private equity fundraising dip to its lowest level since 2017, dropping by 11.5% according to S&P Global. Investors expanded their risk diversification, increasingly allocating portions of their portfolios to cash and other asset classes. Despite this downturn, the United States continued to lead, capturing about 50% of the funds raised, with Asia and Europe following. 

UK market dynamics: In the UK, while mid-market deal volumes fell by 10%, the overall value of these transactions saw a slight increase, rising to £48 billion, as reported by KPMG. The Business Services and Technology sectors emerged as the most vibrant areas of activity. It's critical to remember the significant economic contribution of investor-backed companies, which employ over 2.2 million people and generate £137 billion of GDP annually - underscoring the vitality and resilience of the private equity sector.

At Heligan Investments, we remain committed to our strategy of investing across economic cycles with a focus on security technology businesses in sectors such as National Security, Crime Prevention, and Public Safety. These areas are increasingly prioritised in national budgets as governments strive to enhance security and reduce crime, especially in election years.

In 2024 the landscape appears much more promising. With improving market conditions and a pent-up "catch-up effect" for capital deployment, we anticipate a robust year. Plus, the additional day in the leap year might just provide that extra boost needed to make 2024 a standout year for private equity. We are poised to make the most of these opportunities, driving growth and innovation in our key sectors.

At Heligan, we have continued to invest through the cycle as our investment thesis is to support Security Technology businesses across the National Security, Crime Prevention, and Public Safety markets.  These end markets are benefiting from increased GDP spend as countries seek to protect their nation state and reducing crime has become a political vote winner, particularly in an election year.

2024 offers much more hope and improving confidence.  Combined with a ‘catch-up effect’ to deploy capital that should have been allocated over the past 12 months, the outlook is much more encouraging.  And don’t forget, the extra day in 2024… may just make all the difference!