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Q2 Barometer: small-cap boom offsets mid-market lull

Aberdeen Standard Barometer Q2 2019 — Europe records 533 buyout, expansion and early-stage investments over Q2, a nine-quarter low

Unquote and Aberdeen Standard Investments
12 August 2019

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Weakening in private equity activity in Q2 2019, with total deal volume and value dropping compared with Q1
PE houses completed 533 investments across buyout, expansion and early-stage deals, a nine-quarter low
Amount of capital invested, including debt, fell on the previous quarter, but was only a two-quarter low.

European private equity's recent exuberance eased in Q2 as mid- and large-cap buyout deal volume slowed, according to the latest Unquote Private Equity Barometer, published in association with Aberdeen Standard Investments.

There was also a weakening in early-stage investments, but small-cap buyouts and expansion deals continued to post figures consistent with a high investment appetite.

There were 533 buyout, expansion and early-stage investments over the quarter, a nine-quarter low. The amount of capital invested, including debt, also fell compared with the previous quarter but was only a two-quarter low at €47.1bn. Indeed, aggregate value was only just shy of the average over the last 10 quarters of €49.3bn, with the amount of capital invested remaining very strong overall despite the quarter's loss of momentum.

Aggregate value was dented mostly by the drop in the number of mid- and large-cap buyouts, which together knocked €8.7bn off deal value from Q1 to Q2. However, large-cap deals are especially volatile and have varied in volume between two and 11 in the last 10 quarters, while value has varied between €2.9bn and €32.8bn. The drop in mid-market buyout volume was also quite steep, but it is still at the number it was in Q1 2018. Given the ample dry powder remaining in the market, it is unlikely the softening seen in Q2 will continue.

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.