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UK listed company take-private deals up despite interest rate hikes

Private equity-backed “take-private” deals for UK listed companies have beaten last year’s total, from 12 deals in 2021/22 to 13 in 2022/23, as funds continue to be attracted by the lower valuations on UK companies, according to data from International law firm Mayer Brown.

Private equity-backed “take-private” deals for UK listed companies have beaten last year’s total, from 12 deals in 2021/22 to 13 in 2022/23, as funds continue to be attracted by the lower valuations on UK companies, according to data from International law firm Mayer Brown.

While the sharp rise in the cost of acquisition finance over the last year has not slowed the overall pace of PE deals, it has yet to put a substantial dent in the interest of private equity funds in UK listed companies.
 
Share prices of many UK listed companies outside the FTSE100 have decreased significantly over the last two years, making them much more attractive targets for buyers. The FTSE 250 fell 15.8% in value in the last two years; in comparison the S&P 500 (0.5%) and STOXX Europe 600 (0.8%) both increased in value within the same period.
 
Mayer Brown says private equity firms are also keen to complete deals where they see value, as they are sitting on a record $3.7 billion of ‘dry powder’ – capital that has been raised to invest but has yet to be deployed.
 
Overseas-based private equity funds have also been keen to capitalise on the comparative strength of the euro and US dollar against pound sterling which has also made UK listed companies look more attractive. Out of the 13 take-private deals completed last year, seven buyers were based in the US, including EQT, which is acquiring Dechra Pharmaceuticals in a £4.5 billion deal, Genstar Capital, which acquired financial services provider Sanne Group for £1.5 billion and CVC, which bought retailer Ted Baker for £300 million.

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