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Value of European private equity transactions falls 59 per cent

The total value of European private equity-backed transactions fell 59 per cent in the final quarter of 2008 to EUR8bn, the lowest value since quarter two 1997, according to the unquote

The total value of European private equity-backed transactions fell 59 per cent in the final quarter of 2008 to EUR8bn, the lowest value since quarter two 1997, according to the unquote Private Equity Barometer.

The preliminary figures, published by Incisive Media and sponsored by Candover, show that the decline resulted in a full year fall of 59 per cent to EUR87bn compared to EUR198bn in 2007.

In volume terms, declines were more modest with 1,404 private equity transactions reported in Europe during the year, a fall of 14 per cent compared to 2007.

However, only 261 transactions were completed in the final quarter of 2008, by far the lowest recorded number over the year and a 32 per cent decline compared to the prior quarter.

The total value of buyouts in the final quarter of 2008 reflects an even steeper decline than the overall statistics, with the value of European buyouts completed falling 61 per cent compared to quarter three to EUR7bn. Volume fell 55 per cent from 166 deals to 75.

For the full year, the total value of European buyouts competed was EUR73bn, a decline of 61 per cent compared with the EUR175bn reported in 2007. Volumes fell 30 per cent from 823 deals to 578. In value and volume terms, these represent the lowest annual totals since 2004.

Only one transaction was valued in excess of EUR1bn during the final quarter – the Magnum-led acquisition of Portuguese renewable energy utility Enersis.

In the UK, volumes over the final quarter saw an almost two thirds decline from 36 deals to just 13 while the value recorded a 93 per cent drop from EUR4.4bn to EUR338m.

Colin Buffin, managing director of Candover, says: ‘The European buyout market has fallen dramatically and Q4 values were lower than at any time in the last decade. The worsening macro-economic climate and lack of availability of debt financing has prevented most private equity companies from completing larger buyouts, and it is now taking its toll on the mid-market too. As there is no prospect of the debt markets returning in the foreseeable future, the buyout market will continue to suffer.

‘In the meantime, private equity companies are focused on their current portfolio and ensuring their investments are as well equipped as possible to ride out what looks set to be a long and sustained downturn.’

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