Spread between leverage and all-equity deals widens on investor scepticism

While all-equity deals amounted to 30% of European buyouts in the first six months of 2010, this percentage has shrunk to 8.5% in the first half of 2012. This is despite debt still being difficult to secure.

The narrowing of the spread between leveraged transactions and all-equity deals showed deal-appetite despite poor financing options back in 2010, wheras the lack of all-equity deals today would indicate a weakening of confidence in new investments.

Although overall buyout numbers are down, the percentage of all-equity deals was more severely hit and shrunk to almost half that seen in H1 2011. This is likely due to investor scepticism leading to a "wait-and-see" attitude in the Euroepan market.

Most GPs are aware that banks are lending less than they were pre-crisis. European senior loan volumes have fallen substantially since their peak in 2007, when over €160bn was lent across more than 320 deals, according to data from Standard & Poor's LCD. By contrast, in 2011 this was just a little over €40bn for some 140 buyouts.

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