The total value of European private equity backed transactions reached EUR23.9bn in Q3 2010, close to the total value amassed in the entire first half of the year and the highest quarterly value figure recorded since the second quarter of 2008.
This latest quarterly value is more than 80 per cent of the total value of all deals recorded in 2009, according to the preliminary figures released in the Q3 2010 unquote Private Equity Barometer, published by unquote and sponsored by Candover, a European private equity house.
Despite the significant rise in value, deal volumes actually fell to their lowest level in more than a year with just 234 transactions during the quarter following a decline of mid-market and smaller transactions across the Continent.
The total value of buyouts reached EUR21.4bn in Q3, almost double the EUR11.3bn recorded in Q2 and by far the highest figure since the EUR21.6bn witnessed in the second quarter of 2008.
The significant increase in value was driven by a return to the market of large buyouts. In total, there were six transactions valued in excess of EUR1bn equalling the combined total over the last 18 months. Despite the rise in the value of buyouts, volumes fell during the quarter from 97 to 89.
The mid market, which was driving the market in the first half of the year, saw an 18 per cent fall in deal value to EUR7.1bn and a 15 per cent fall in volumes to 28 transactions compared to Q2
The take private of UK based Tomkins was the largest buyout recorded during the quarter at EUR3.51bn, followed by the EUR2.56bn buyout of Sunrise Communications in Switzerland and the EUR2.50bn buyout of RBS WorldPay in the UK. Other notable UK based transactions included the EUR1.2bn buyout of AutobarGroup, the EUR451m buyout of Stonegate Pub Company and the EUR350m buyout of Equity Trust.
The UK remained the largest market by value of buyouts and accounted for 44 per cent of all deals during the quarter. Three of the largest UK deals were valued at over a EUR1bn each pushing the total value of buyouts in the UK to EUR9.4bn, more than double the previous quarter. Like the rest of the Continent however, the volume of deals in the UK fell, from 40 in Q2 to 26 in Q3.
John Arney, managing partner of Candover Partners, says: “It is encouraging that in addition to the more predictable larger secondary buyouts, Q3 witnessed the completion of some large primary deals, suggesting that sellers are out there and lenders’ confidence continues to grow. What concerns me though is the fall off in the mid-market and it is difficult to see what’s behind this. It’s unlikely that there is a lack of sellers, and debt finance should be available, so is it the faltering confidence in the economy that’s choking mid market volumes? Q4 should provide an important barometer to determine the cause. Will it reveal that Q3 was simply a blip or alternatively that European private equity is still bumping along the bottom of its cycle? Let’s see.”
