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Volatile quarterly PE performance delivered consistent outcome for 2013

European private equity transaction volumes bounced back in Q4 following a weak Q3, according to the European Private Equity Barometer, published by unquote” and SL Capital Partners.  

A total of 326 deals were completed, the highest total since the final quarter of 2012, with the total value of EUR23.6bn up 40 per cent on the EUR16.9bn transacted in Q3.
 
This value uplift was largely driven by the buyout space, where mid-market deals led the way with volumes at a three-year high.  These mid-market deals were the core growth driver during the year in Europe, representing 60 per cent of the total value in 2013.
 
For the full year, total numbers ended down for the second consecutive year at 1,272 deals, however overall value was stable at EUR78.1bn.
 
The buyout segment enjoyed a strong Q4, with the volume of deals rising for the third consecutive period to the highest total since Q3 2012 at 115 deals.  Despite this, the 421 deals for 2013 as a whole marks a second year of successive decline.
 
Value showed more significant growth during the final months of 2013, with the Q4 figure of EUR21.1bn up 37 per cent on the EUR15.4bn recorded in Q3. This strong performance offset some volatility during the year, helping 2013 achieve a total value of EUR69.2bn, consistent with the prior period.  
 
The EUR1bn large-cap segment recorded its first deals since the second quarter and accounted for EUR5.6bn of the overall total.  However, the key growth remains in the mid-market EUR100m - EUR1bn transactions.  This segment rose by 60 per cent and 11 per cent in terms of volume and value respectively, to 48 deals and EUR13.3bn.  
 
The UK edged out the German speaking DACH region to maintain its leadership in Europe in both volume and value terms.  Most regions registered growth, with only the Nordics declining in volume and value.
 
Peter McKellar, managing partner and CIO of SL Capital Partners, says: “2013 has proved to be a more volatile year than expected, with the positive developments in Q4 resulting in a year of consolidation.  Momentum is strong in the core European middle market deals of EUR100m to EUR1bn, which reflects the increased confidence of the private equity funds to invest against a background of an improving macro-economic outlook for Europe, primarily in the UK and Germany.  Vendors are prepared to transact and this is supported by availability of leverage.  The pipeline of transactions as we enter 2014 looks to be positive and, as M&A activity picks up more generally, we expect this year to be one of growth.”

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