Benelux deal activity continues to fall

John Bakie
17 January 2011

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For many European regions, 2010 was a brighter year, with private equity activity seeing a slow revival from the doldrums of 2009. But the Benelux market has continued to see a falling number of deal completions. John Bakie gives an overview

Despite being the smallest region covered by unquote", the Benelux has often punched above its weight in the private equity market. As home to many larger companies serving markets across Europe and globally, the Benelux has seen more than its fair share of major buyouts, despite its relatively small population and total GDP.

However, following the financial crisis, the region saw private equity deal volumes plummet. While this was also happening in every other market around Europe, the Benelux saw this decline continue through 2010, in contrast to other regions. Private equity volumes peaked in 2007 with 122 deals recorded by unquote". However, this has fallen every year since, down to 87 in 2009 and a mere 50 in 2010.

Despite this fall in activity levels, the market saw a significant increase in the value of deals, owing to a number of substantial buyout transactions. Total deal value increased almost fourfold, from €2.35bn in 2009 to €8.3bn last year. Deals such as the €1.2bn secondary buyout of nappy maker Ontex, and the €3bn buyout of Univar, have certainly skewed value figures in this relatively small market.

The dominance large deals have here could perhaps explain continued low levels of private equity activity in the region. With substantial leverage packages being far more difficult to arrange than they were prior to the recession, acquiring large multi-nationals has become significantly harder for even the biggest private equity players. Without the leverage to support these kinds of acquisitions, it is perhaps no surprise that the Benelux has not been as active as it once was. It remains to be seen whether an improved debt market in 2011 will lead to a revival in its fortunes.