Growth equity deals enjoy Q4 uptick

The growth capital market saw activity levels improve considerably in the fourth quarter of 2012 following the nadir reached over the preceding three months. In volume terms there was a 26% increase in deals completed from 115 to 145, which is encouraging in so much as it suggests a return of confidence to the market. While this remains below the 155 transactions recorded in Q2, it is higher than at any time over the preceding year. On an annual basis this meant 2012 finished with a total of 557 completed investments, 12% and 23% below the totals for 2011 and 2010 respectively.

Similarly in line with the buyout market, the bounce back in investment was more marked in value terms. The aggregate €1.6bn investment total for the final quarter was some 45% up on the €1.1bn recorded in Q3, though it is worth noting that it remains low in comparison to recent historical averages. Leaving aside the anomalous third quarter dip the figure is the second lowest recorded over the nine-quarter sample period, with the average deal value of €10.9m also lower than any other period over that time with the exception of Q4 2011. The annual value total of €7.2bn for 2012 is 22% and 20% below the respective figures for 2011 and 2010.

On a regional basis the UK was by far the most active in Q4 2012, being as it was home to 48 growth capital transactions representing more than a third of overall activity. This included two of the top 10 largest deals with a disclosed value and, notably, the most sizable transaction in this segment during the quarter - the €190m investment into Aston Martin by Investindustrial. There was further evidence of the turnaround in fortunes for the southern European markets of Spain, Portugal and Italy, which recorded 24 deals in total over the three months including the second largest for Q4 - the €120m investment into Spain-based PortAventura, also by Investindustrial.

This is an extract from the latest unquote" Private Equity Barometer, published in association with Arle Capital Partners. Click here to read the Q4 barometer in full

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