Q1 crash - lowest levels since 1996

Private equity investment activity in Europe has now hit its lowest level since 1996, with the value of transactions dropping over the quarter by more than half since Q4 2008, to EUR4bn according to the unquote" Q1 2009 Private Equity Barometer, produced in association with Candover.

In the absence of debt, it comes as no shock that the buyout space in Europe continues to decline sharply with just 49 private-equity backed acquisitions completed over the three months, down more than a third on Q4 2008 (see page 24).

But the lack of leverage in the market, while virtually killing the buyout sector, has opened other areas of investment in the private equity space. Many have now shifted their focus to growth capital investments - all-equity deals in which investors take smaller stakes of their targets (see page 18). But has this been reflected in Q1 statistics?

Development capital deal activity has also continued to slide in Q1 - both volume and value recorded a fourth consecutive quarterly decline, at 32% and 81% respectively, since the peak in Q2 2008

This quarter, however, saw abnormally large transactions completed by several large buyout houses, meaning the figures for the first three months this year are down by a much more modest 4% in volume and 13% in value, compared with Q4 2008

The early-stage segment has also continued a downward trend throughout Q1 2009. The figures reveal a total of 80 deals completed over the period worth a combined total of EUR362m, a decline of 17% in volume and 10% in value.

But these downward slides are noticeably less pronounced than other areas of the market, as activity in the early-stage sector is actually as high as it was in Q4 2007, while the value total is higher than in Q2 2008.

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