European bolt-on activity grew rapidly in Q1 accounting for 63.4 per cent of deal volume – a new Q1 decade peak – as the Covid-19 effect has yet to show up in later quarters this year.
Private equity deal activity reached a new first quarter peak in Q1 2020, at 1,025 deals for a total of EUR132.9 billion— a year on year increase of 6.2 per cent and 40.4 per cent respectively, according to new data released by PitchBook in its latest Q1 European Private Equity Breakdown report.
We are yet to see a pandemic related slowdown in the remaining quarters of the year, however, as deal activity is anticipated to fall to levels not seen since the 2008 global financial crisis.
Fundraising activity fell in Q1 2020, with EUR10.9 billion raised across 20 vehicles, as Covid-19 has made it difficult for LPs to conduct onsite due diligence and set up face-to-face meetings.
While no European private equity mega-funds closed in Q1, UK-based Intermediate Capital Groups’ Strategic Equity Fund III that closed on EUR2.7 billion, and ICG Europe Mid- Market Fund, closing on EUR1 billion, were the two largest funds to close this quarter.
The research also revealed that exit activity decreased in Q1 2020, recording EUR35.7 billion across 210 liquidity events – year on year declines of 17.2 percent and 21.5 percent, respectively.
As growth and minority investments are anticipated to account for an outsized proportion of deal value, Pitchbook said it expects fundraising for growth equity funds to post “decent” proportions in 2020.
The bulk of Q1 exit value came from SBOs for the second consecutive year. IPOs were the only exit type to see an increase in year on year exit value from Q1 2019.
Meanwhile, favourable debt dynamics have been encouraging large LBOs, highlighted by Blackstone’s EUR5.5 billion buyout of UK-based IQ Student Accommodation, the UK’s largest private equity real estate deal.
Indeed, the UK accounted for the lion share of all deals in Europe in the first quarter. Deal value rose to EUR34.3 billion in Q1 in the UK and Ireland, representing a 43.2 per cent share of overall European deal value – a first-quarter decade high.
Four of Europe’s top five deals overall in Q1 closed in the UK & Ireland, including the EUR2.1 billion buyout of BMI Healthcare by Circle Health.
Pitchbook is a data company providing research and data on venture capital, private equity, M&A, and public companies.