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Q1 Barometer: Mega-deals propel value to post-crisis record

Aberdeen Standard PE Barometer Q1 2018
Deal volume reached the second highest quarterly level in two and a half years, while aggregate value climbed to €54bn
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European deal volume in Q1 reached its second highest level across the previous 10 quarters, while mega-deals pushed aggregate value to a post-crisis peak, according to the latest Unquote Private Equity Barometer, published in association with Aberdeen Standard Investments.

The European private equity market began the year in a similar vein to how it finished the last. Deal volume was robust while value continued its upward trend, leading to the highest-value quarter since 2007.

There were 514 deals in Q1, up 10% on the previous quarter. The rise builds on 2017's strong dealflow and is the second largest quarter for deal numbers over the last 10. Much of this market momentum can be traced to Europe's buyout market, which helped overall deal value reach a post-crisis quarterly high of €54bn in Q1.

The first quarter of 2018 saw 221 buyouts, up from 210 in the Q4 2017. The buyout market has been strengthening consistently, and has now posted more than 200 deals in four consecutive quarters for the first time in the last decade. Growth capital deals also had a big quarter. There were 210 investments, a 10-quarter high. GPs continued to invest a large amount of growth capital – €4.8bn – which, while down on the previous quarter, is in line with the higher levels of capital deployed over recent quarters.

Early-stage investments picked up, with a 6% rise to 83 in Q1. Despite early-stage deal value declining to €667m, it was the second largest amount invested over the last 10 quarters. The early-stage sector appears to be slowly returning to the sort of deal numbers it posted prior to 2016, when it tended to exceed 100 investments per quarter.

Within the buyout market, the number of large-cap (≥€1bn) deals climbed to a post-crisis high of 12. This naturally led to a sizeable increase in this segment's contribution to deal value. In fact, 64% of Q1's deal value can be accounted for by these mega-deals. The small-cap ( < €100m) segment also performed well with 163 deals, up from 150, while the mid-caps (€100m-1bn) dropped to 46 from 52.

Click here to download the full report, including detailed commentary and statistics for the growth capital and venture capital markets, as well as regional breakdowns.

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