When the FTSE 100 retailer Alliance Boots was transformed into one of Britain’s largest privately-owned companies last year, the £11.1 billion deal underlined the huge influence wielded by the private-equity industry.

Europe’s largest management buyout, led by the American private-equity giant Kohlberg Kravis Roberts, has propelled the high-street chemist to No 2 in the latest Top Track 100, published in partnership with The Sunday Times with title sponsorship from Deloitte. The league table, compiled by the Oxford-based research and networking events company Fast Track, ranks Britain’s biggest private companies on their latest sales.

The acquisition was one of 636 buyouts in 2007 as cheap debt fuelled frenzied deal-making early in the year. Despite the credit crunch, total buyout values hit a record £42.2 billion by the end of December, according to the Centre for Management Buyout Research.

The growing power of private equity is clearly visible in this year’s Top Track 100. The league table includes 47 companies backed by private-equity players, against 39 last time and 33 in 2002. As well as Alliance Boots, several other British institutions have been snapped up by private equity over the past year, including music publisher EMI (No 21: sales £1.8 billion) and estate agent Countrywide (No 80: £633m).

This year’s Top Track 100 also offers a snapshot at a turning point in the economic cycle. The league table includes swathes of consumer, property, leisure and hospitality businesses that are facing the fall-out from the credit crunch. Together, they have combined sales of £149 billion and employ more than 950,000 staff, equivalent to about 10% of GDP and 3% of the UK workforce. As the business climate turns chillier, Deloitte’s Stuart Counsell looks at some of the challenges.

The rise of private equity lies at the heart of the significant league table movements this year. A total of 18 firms have left the list, of which 13 have been bumped off by companies created by a string of demergers and public-to-private transactions, mostly led by private-equity investors.

For example, fleet services provider Camden Group Services (No 56: £809m) has been spun out of Camden Motor Group by Barclays Private Equity. 3i has backed the privatising of the maintenance services provider Enterprise (No 61: £766m) while Bank of Scotland Corporate and West Coast Capital have taken the housebuilder Crest Nicholson (No 74: £677m) off the stock market. The creation of so many large private companies has raised the bar so that sales at the company ranked 100 are up from £419m in 2007 to £519m this time.

Britain’s largest privately-owned company and its wealthy founder were almost unknown outside business circles until they were thrust into the headlines this year. In April, a strike at Ineos’s Grangemouth refinery over plans to close the final-salary pension to new members put the plant’s owner, Jim Ratcliffe, in the media spotlight.

But Ineos, No 1 in Top Track 100 for the second consecutive year, and Ratcliffe, with an estimated personal fortune of £2.3 billion, deserve recognition for their extraordinary success. In just 10 years, Ratcliffe has transformed a small business into the world’s third-largest petrochemicals player without private-equity backing. Instead, he has used bonds and bank debt to snap up more than a dozen undervalued subsidiaries from oil and chemicals giants. In 2005, Ratcliffe’s £5.1 billion acquisition of BP’s petrochemicals business Innovene, the owner of Grangemouth, quadrupled the group’s turnover. With revenues of £18.8 billion, Ineos remains far ahead of its nearest league-table rival, Alliance Boots.

Ineos is also the league table’s most profitable company ranked by ebitda (earnings before interest, tax, depreciation and amortisation) with profits of £1.5 billion, which excludes substantial interest payments on the debts.

Companies dealing in consumer goods and services dominate the Top Track 100, although the effects of the credit crunch and rising food and energy prices are being felt. Even Sir Philip Green, owner of Arcadia (No 13: £1.9 billion) and BHS (No 48: £873m), has commented that the retail environment is “horrible”.

Somerfield (No 5: £4.2 billion), Littlewoods Shop Direct (No 19: £1.8 billion), Iceland (No 14: £1.8 billion) and New Look (No 32: £1.2 billion) are among 29 retailers in the league table. High-street mobile-phone seller Phones 4u has joined the list at No 58 (£782m) after Providence Equity Partners bought it in 2006. Monsoon Accessorize has come in at No 96 (£531m) after being delisted last year in a £755m deal led by founder Peter Simon.

Travel, hospitality and leisure firms, including gaming group Gala Coral (No 26: £1.3 billion), airline operator BMI (No 38: £1 billion) and health-club operator Fitness First (No 97: £526m), account for a further 26 places. Laing O’Rourke (No 7: £3 billion) and Sir Robert McAlpine (No 15: £1.8 billion) are among 15 property and construction companies on the list.

Last year several utilities, including Thames Water (No 24: £1.5 billion) and energy group Viridian (No 39: £1 billion), won places on the league table. This time they are joined by a clutch of ventures that provide the sector with support services. As well as Enterprise, which has maintenance contracts with BT and Thames Water, Biffa (No 64: £743m), which provides waste-management services, joins the list after being demerged from Severn Trent in 2006 and taken private in February this year.

Although private equity looms large on the league table, Peter Simon and Jim Ratcliffe are two of 28 entrepreneurs who own all or the greater part of the firms they launched. They are joined by a number of wealthy individuals including Sir Richard Branson, who holds stakes in Virgin Atlantic (No 10: £2.2 billion) and Virgin Trains (No 53: £823m). Another 20 companies, such as the conglomerate John Swire & Sons (No 8: £2.5 billion) and the digger-maker JCB (No 9: £2.3 billion), are owned by families.

The biggest riser on this year’s Top Track 100 was the online bookmaker Bet365, climbing 16 places to No 16 (£1.8 billion).

Companies on this year’s Top Track 100 have seized the opportunities provided by cheap debt and buoyant consumer confidence to build sales by acquiring additional businesses, new backers and fresh funds. But as the cycle turns, next year’s league table could look somewhat different.

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