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Q1 sees shift to larger PE deals, says SL Capital

Preliminary figures released by SL Capital in the Q1 2016 Private Equity Barometer, published by unquote”, show that overall the year to Q1 2016 witnessed a shift towards larger deals, with total deal value increasing by 28.2 per cent, while volume slipped by 15.9 per cent.  

As a result, average deal value increased by 52.4 per cent

The number of European private-equity-backed deals declined by 11.7 per cent in the first quarter of 2016, from the 394 transactions seen in the previous three months to 348 transactions. Combined deal value also declined, slipping by 54.2 per cent.

The aggregate value of buyouts in the year to Q1 2016 (EUR119.6 billion) was up 26.7 per cent on the previous 12 months , while the number of deals 9544) represents an 8.3 per cent decline

Aggregated value decreased markedly – dropping by 54.5 per cent from the previous quarter’s total of EUR30.1 billion, to EUR13.7 billion

A shortage of dealflow in EUR100 million-plus ranges was responsible for the decrease in the total number of buyouts in the first quarter.  The core mid market value (EUR100 million – 1 billion) and large cap (EUR1 billion-plus) segments were down from 45 to 40 deals and from six to one respectively. The small-cap (sub EUR100 million) range barely improved relative to fourth quarter, increasing from 85 to 86 transactions

France was the only region to record a rise in deal numbers in Q1 – up 30 per cent from 30 deals in Q4 to 39. Total deal value declined everywhere  except the DACH region, where the value of buyouts in Austria and Germany jumped EUR1.5 billion, ensuring that the region’s total value rose by 2.6 per cent

Peter McKellar, Senior Managing Partner and CIO at SL Capital, says: “Early 2016 was always going to be tough, following the high activity levels for European private equity towards the end of 2015. The recent market volatility stemming from global factors, including the slowdown in Chinese growth, brought many potential transactions to a halt as vendors and private equity funds paused to see how this would impact the projected returns for deals. To an extent, the French and German markets bucked the trend.  Assuming current macro-economic and political uncertainties dissipate, we would expect a pick-up in transactions in H2 2016.”

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