European buyout houses have generated more than EUR100 billion in exit proceeds for the fourth year in a row, rising 12 per cent in 2017 to reach EUR112 billion across 436 divestments.
That’s according to provisional data from the CMBOR at Imperial College Business School, sponsored by Equistone Partners Europe and Investec Specialist Bank.
This strong performance is in spite of uncertainty around Brexit progress as well as national elections in a number of Europe’s major economies, suggesting unwavering appetite from buyers for European private equity-backed assets. With an average hold period of 70 months for harvested deals, it seems backers are prioritising multiples over IRRs for their investors.
“Private equity fund managers have continued to realise their investments at a consistently high rate, with an impressive EUR489 billion generated through private equity-backed sales over the last four years,” says Christiian Marriott, Partner and Head of Investor Relations at Equistone Partners Europe. “All exit routes have been open, including foreign buyers increasingly looking to buy European companies. The upshot of this is high-quality buyout houses generating strong returns for their investors who, in turn, are re-investing increasing sums back into the asset class.”
Indeed overall buyout activity has recovered to 2015 levels, with EUR90.2 billion recorded for 2017, up approximately 50 per cent on last year’s figure.
“The uptick in activity is likely down to a ‘back-to-business mentality’ as investors have had 18 months to get comfortable with a new European backdrop,” says Shaun Mullin of Growth & Acquisition Finance at Investec. “The run-up to and particularly the period following the UK’s Brexit vote saw investors pause and deals delayed, but the beginning of this year saw significant fundraising announced and strong deal activity coming through, some of which may have been pent-up from the Referendum aftermath. Our pipeline is currently fuller than it has been for two years.”