Private equity on the road to recovery

Kimberly Romaine
19 July 2013

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Following a month of stellar exits, an uptick in buyouts and a record number of fundraisings, there is reason to believe private equity markets are turning a corner. Kimberly Romaine reports.

This summer has seen French VC Auriga make 33x money when it sold a business to Adobe. In Benelux, a mini exit boom saw CVC monetise bpost in Europe's largest IPO of the year, while the Copenhagen Exchange welcomed its first IPO in two years from CVC-backed Matas. Germany hosted the year's largest buyout and exit when EQT sold Springer Science for €3.3bn – following a close flirtation with stock markets.

In the UK, buyout activity has bounced back after a woeful first quarter. The latest UK Watch, in association with Corbett Keeling, reveals a 40% uptick in small buyout volume, with the impetus particularly strong at the end of the quarter – suggesting momentum may be picking up. Larger deals (EV >£150m) saw aggregate value more than double to nearly £4bn on the back of a strong April.

But much of the optimism comes in the form of the annual unquote" British Private Equity Awards, with submissions up a fifth on last year's record. It's not a herculean marketing effort on the part of unquote", but a true emergence of amazing achievement. For example, eight entries for the Exit of the Year category saw UK-based GPs generate at least 5x money on exits realised in the past 12 months. That many of them were deals done in the post-Lehman haze suggests we could be entering a period of harvest for the transactions done in the most unsettled backdrop the market has known.

Equally impressive is the record number of fundraisings – despite it being a formidable time to raise money, unquote" has been recording a steady (and high) number of vehicles closing above target. Many are taking a long time, but awards entries suggest all are diversifying their LP bases – including bringing in new North American investors, only recently "allergic" to Europe and its eurozone crisis.

Finally, unquote" was delighted to receive entries from relative newcomers into the Debt Provider category, suggesting new outfits are moving in to fill the gap left by some incumbent lenders' reduction in lending capacity. These are on top of the myriad debt funds unquote" has recorded in 2013.

The market remains tough, but the industry is persevering. Unquote" looks forward to recognising success with the Awards Shortlist, to be published the first week of September and the winners announced on 3 October.