The European buy & build market saw increased activity in the second half of 2014 according to to Silverfleet Capital and mergermarket’s latest European Buy & Build Monitor.
The Monitor tracks global add-on activity undertaken by European headquartered companies backed by private equity.
A total of 169 add-ons were reported in H2 2014 compared to 124 in H1 2014, which was later upwardly revised to 158 as further data for smaller Buy & Build transactions usually emerges after the publication date. The number of deals in H2 2014 is therefore very likely to be revised upwards in the next report. The comparable number for the second half of 2013 was 153. The higher number of add-ons recorded in H2 2014 is mainly the result of a very strong third quarter, the third highest since 2008, and with further data likely to come in for deals announced in Q4 of last year the level of Buy & Build activity in the second half of 2014 has rebounded strongly.
The average disclosed value of add-ons in H2 2014 was GBP44 million, based on the 35 deals with disclosed values reported in that period. This is however below the upwardly revised average of GBP90 million for the 24 deals with disclosed values announced in H1 2014 and is also below the GBP81 million for the 26 deals in H2 2013 for which valuations are available.
The largest add-on announced during H2 2014 was the GBP200 million purchase of Murco Petroleum by Motor Fuel Group, both UK based. Other notable transactions in H2 2014 included Redexis’ EUR236 million purchase of Gas Energía Distribución de Murcia – both based in Spain; and Host Europe’s EUR210 million acquisition of intergenia based in Germany. Motor Fuel Group is backed by Patron Capital, while Redexis is owned by Goldman Sachs Infrastructure Partners and Host Europe by Cinven.
Neil MacDougall, Managing Partner of Silverfleet Capital, says: “In our last report in September 2014 we predicted that with a stable economic situation in Europe and benign financing conditions, we would expect to see stronger levels of Buy & Build activity. Q2 activity eventually turned out to be much higher than originally reported and this was followed by a very busy Q3. We are therefore finally able to report a noticeable pick up in Buy & Build activity albeit most of this increase, as can be seen from our geographic analysis, was the result of add-ons made in North America by European companies.”
