European investors fuel recycling boom

The volume of secondary buyouts in Europe has risen dramatically in the past four years. France and the UK lead the pack, but records were broken across Europe in 2006.

France was the largest recycler of deals, recording 59 secondary transactions up from 49 in 2005. In France SBOS were especially common at the smaller and mid-end of the market.

In the UK, there were 45 secondary buyouts in 2006, compared with 44 in 2005.

The DACH region finished in third place with 31 secondary transactions in 2006, nearly doubling from its total of 17 in 2005.

The Nordic region recorded 18 recycled deals in 2006, a drop from 2005's figure of 22.

The number in 2007 is likely to exceed last year's levels since 15 SBOs have so far been recorded. A thriving SBO market is generally regarded as an indication of a mature private equity market.

The last recorded SBO in the Nordic region was Litorina Kapital's acquisition of Euroflorist from Accent Equity reported to be worth SEK 300-400m (October 2007, page 44).

The proportion of recycled transactions to total number of buyouts has remained relatively steady in recent years in the UK. The percentage has varied from 18.2% to 23% from 2002 to September 2007.

In France the difference is greater. Leading up to 2005, 20-25% of the French market was made up of recycled deals. From 2005 to today the proportion is closer to 40%.

In Germany the percentage of secondary buyouts was less stable, ranging from 9% in 2002 to 23% in September 2007. Southern Europe and Benelux continue to record the lowest number of LBOs and recycled transactions in Europe.

The Nordic countries have shown a growing number of LBOs. The proportion of these that were recycled has varied:in 2003 there were 33 LBOs, of which nine, or 27%, were SBOs. Of 108 LBOs in 2006, just 18, or 17%, were SBOs. These statistics suggest that the Nordic market has good prospects for growth going forward.

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