Private Equity Watch converts to Euros

The latest Royal Bank Private Equity …unquote†UK Watch has registered a slowing of the rate of decline in the volume and value of buyouts completed in the UK, with figures now standing at similar levels to those last seen twelve months ago. The figures used in the latest UK Watch are, for the first time, based on buyout deals with a value of over EUR 10m (rather than £10m+). This change is intended to bring the statistics into line with Initiative Europe’s other regional Watch statistics, which are published in …unquote’s sister publications, France …unquote†(www.franceunquote.com) and Deutsche…unquote†(www.deutscheunquote.com).

The economic uncertainty which has characterised recent months can also be seen to have left its mark on the figures shown in the UK Watch. While the P/E ratio for EUR 10m+ buyouts had declined from over 12 in the first half of last year to stand at just over nine throughout much of this year, the latest figures record a rise to 10.44 in the year to 1 December 2001. While this recent shift is only relatively small, it is a reflection of a much more dramatic shift which has been witnessed in the FTSE Small Cap P/E ratio. One year ago the Small Cap P/E ratio stood at around 20. However, since the end of the summer this year, the figure has risen from a little over 25 to around 55. This leap is associated with a collapse in the recorded total earnings of Small Cap companies, which have fallen from approximately £3.5bn to around just £836m over the last 12 months according to FTSE figures (while the number of companies included in the index has only fallen from 437 to 401). Over the same period the market capitalisation of the FTSE Small Cap index fell from approximately £71.2bn to just £46.7bn.

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