Overall European private equity deal volume reached an all-time annual record of 2,230 in 2018, according to Preliminary figures released in the Q4 2018 Private Equity Barometer, published by unquote in association with Aberdeen Standard Investments.
Deal value in 2018 reached an 11-year high of EUR199 billion, with Q4 the weakest of the year with 497 transactions, down 12 per cent on Q3. Value also had a slow end to the year at EUR30.5 billion, the lowest since Q3 2016.
In terms of European buyouts, volume declined very slightly on the year, coming in at 981 compared with last year’s 988, while value reached EUR173 billion, its highest since 2007 and a rise of 16 per cent on the previous year.
Dealflow meanwhile, slumped at the end of the year with 221 deals in Q4, down 15 per cent on Q3, while value was substantially lower in Q4 at EUR23.3 billion, a 12-quarter low and average buyout value took a tumble, dropping to a 24-quarter low of EUR105 million.
Small-caps (<EUR100m) and large-caps (EUR1 billion+) slowed in Q4, while the mid-market was little changed. In addition, small-cap volume dropped 20 per cent to 157 and there were only two large-cap transactions, down from 12 in Q3.
Breaking the data down by region, Benelux had a strong quarter with 31 deals, up from 20. Sharp fall in volume were seen in the Rest of Europe, UK and Nordic countries, while alue fell in all regions in Q4.
In terms of deal sourcing, the number of secondary buyouts returned to normal levels after a spike in Q2. The largest transaction was the secondary buyout of FNZ by Caisse de Dépôt et Placement du Québec and Generation Investment Management in a deal valuing the firm at GBP1.65 billion
Graham McDonald, Head of Global Private Equity, Aberdeen Standard Investments, says: “2018 overall was a very strong year for private equity despite a significant slump in value in Q4. In the UK, the Brexit overhang is causing investors and dealmakers to draw breath in light of an uncertain environment. The UK was the only region where annual buyout value declined, with a 31 per cent drop in value to EUR29.1 billion.”
“Across Europe, the mid-market continues to be robust, and encouragingly the volume of growth capital deals continues at pace with a 4 year high evident. Annual volume was boosted by a strong year for expansion deals and it is encouraging that the average early-stage equity was EUR10.4m, the fourth highest on record.”
“The key difference in market dynamics when comparing the current market to the 2006-2007 market is the number of secondary deals. In 2007, the record year for large-cap buyouts, just 42 per cent of those transactions were between private equity houses, and in 2006 the proportion was 40 per cent. This compares with 66 per cent last year and 72 per cent in 2017.”
