The first half of 2016 has seen an overall shift towards larger private equity deals with total deal value up 2 per cent and volume slipping by 17 per cent, according to SL Capital’s Q2 2016 Private Equity Barometer.
The number of European private-equity-backed deals declined by 8 per cent in the second quarter of 2016 from 381 transactions in Q1 to 350. Combined deal value improved in the second quarter, rising by 66 per cent.
The aggregate value of buyouts in the year to Q2 2016 (EUR107.4 billion) was down a nominal 0.2 per cent on the previous 12 months, while the number of deals (560) represented a 4 per cent decline. Aggregated value meanwhile increased markedly – rising by 80 per cent from the previous quarter’s total of EUR15.2 billion to EUR27.3 billion.
An abundance of dealflow in the small-cap (sub-EUR100m) and large-cap (EUR1bn+) segments was responsible for the increase in the total number of buyouts in the second quarter.
France was the only region to record a decline in deal numbers in Q2 – down a third from 39 deals in Q1 to 26. Total deal value improved everywhere except the Benelux region, where the value of buyouts in the Netherlands dropped by EUR679m, resulting in the region’s total value decline.
Peter McKellar, senior managing partner and chief investment officer, says: "Overall, European private equity faced significant headwinds in Q2 2016 that impacted the number of growth capital and early-stage deals. On a more positive note, European buyouts demonstrated growth in the number of deals announced in the period. The EU referendum in the UK appears to have resulted in some acceleration of buyout completions ahead of the vote, while continental European markets reverted to the normal quarterly pattern of activity. We continue to monitor closely the broader European buyout market as it adjusts to the post Brexit referendum environment. Volatility may offer opportunities for private equity investors, who have substantial capital to invest.”
