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European PE deal volume down but money flooding into DACH and UK buyouts

Overall European private equity deal volume dropped 13 per cent in Q3 2017 compared with Q2 but remained marginally higher than Q1’s figure, according to preliminary figures released in the latest Private Equity Baromenter published by ‘unquote” and SL Capital Partners.

The combined value of European private equity backed deals slid 9.7 per cent but remains elevated compared to quarters in recent years, while average deal value in Q3 2017 was EUR95 million, up 4 per cent on the EUR91.4 million posted in Q2.
The aggregate value of European buyout deals edged down to EUR35.8 billion, 4.7 per cent lower than in Q2.  The number of deals declined to 195 in Q3, a fall of 10 per cent.
Aggregate deal value jumped in the UK to EUR13.7 billion marking its biggest quarter since the financial crisis. DACH countries also saw a jump from EUR4.6 billion to EUR9.6 billion. 
Dealflow dropped in each deal size range (<EUR100 million, EUR100 million-EUR1 billion, and ≥EUR1 billion). The number of small cap (<EUR100 million) deals fell by 11 to 140 but is at the second highest level in the last 10 quarters. Volume in the mid-range (EUR100 million-1 billion) decreased to 50 deals from 60 with value also falling to EUR16.5 billion from EUR18.4 billion. The large cap range (≥EUR1 billion) decreased by one deal while value climbed slightly to EUR13.8 billion.
Buyout volumes remain historically high despite the quarter-on-quarter drop. 
Peter McKellar (pictured), Global Head of Private Equity and Infrastructure Equity, Aberdeen Standard Investments, says: “Both the UK and DACH led the way with the amount of capital invested despite a slight slowdown in activity levels across the wider European market. Activity levels do however remain robust both in terms of volume and value. Interestingly a major component of deal sourcing came from the private sector, the highest level in seven years as vendors recognise the prices being paid for quality assets.” 

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