DACH buyout market weathers Covid-19 impact, UK and France suffer

The European private equity market continued to cool in Q2, after suffering a weak start to the year. Deal numbers decreased in the buyout and growth capital segments, while the number of early-stage investments stayed in line with the previous quarter. Total deal value saw a drastic plunge on the previous quarter, mainly due to a steep fall in large-cap buyout deal value.

Buyout activity took a dive in nearly all European regions. The steepest falls were in the UK & Ireland, where it dropped from 58 in Q1 to 20 (-65%), and France, down from 55 to 28 (-49%). Other European regions also saw a decrease in deal volume – southern Europe by 36%, Benelux by 26%, and the Nordic countries by 25%.

Only two regions were relatively spared by this sharp fall in activity. DACH only saw a marginal fall of two deals between Q1 and Q2, making it the busiest region across Europe in buyout volume terms. But it is worth noting that the 36 buyouts recorded are a historically low level, especially compared with the 49 transactions recorded over the same period last year.

In CEE, deal volume went slightly up from six to seven deals. Once again, this is a low volume of activity by historical standards: the quarterly average recorded across 2017-2019 stood at 12 transactions.

Deal value also declined in most regions in Q2, rising only in the Nordic countries (+47%) and Benelux (+35%) on the previous quarter. Meanwhile, it decreased by 81% in DACH, by 67% in southern Europe, by 65% in France, by 59% in the UK & Ireland, and by 25% in CEE.

Q2’s largest deals

Benelux: KKR agreed to acquire Netherlands-based holiday parks operator Roompot Group from PAI Partners in June. At the beginning of 2020, PAI hired Rothschild to sell the company for an expected valuation of around €1bn, according to Unquote sister publication Mergermarket.

CEE: Mutares AG acquired Cooper-Standard Automotive's European sealing and rubber fluid transfer systems business in May. The financial terms of the transaction were not disclosed. The company reported revenues of €180m in 2019.

DACH: EQT entered exclusive negotiations to acquire Germany-based hygiene products producer Schülke in April. The company was originally marketed based on an EBITDA of €50-70m, according to Debtwire – this was raised to €75m as the coronavirus outbreak boosted the company's trading.

France: Bridgepoint acquired a majority stake in French insurance broker Groupe Financière CEP from US-based investment firm JC Flowers and the company's founder in May. The deal valued CEP at around €1.3bn, equating to approximately 10x EBITDA.

Nordic: Nordic Capital acquired Stockholm-based financial advisory firm Max Matthiessen from Willis Towers Watson in May. Terms of the deal were not disclosed. The company reported SEK 1.55bn in revenues in 2019.

Southern Europe: EQT acquired a majority stake in Spain-based Freepik, a provider of digital visual content, from its founders and management team in May. The deal gave the company an enterprise value of around €250m, equal to 21x EBITDA, according to market sources.

UK & Ireland: Warburg Pincus agreed to invest more than £250m in the acquisition of wealth manager Smith & Williamson (S&W) by Permira-backed Tilney. As part of the revised transaction, funds advised by Warburg Pincus will co-invest in the combined business alongside funds advised by Permira. The proposed acquisition of S&W was confirmed in August 2019 by the company's largest shareholder, AGF Management, and is expected to be worth £1.8bn.

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• Topics
• Investments
• UK / Ireland
• DACH
• France
• Nordics
• CEE
• Benelux
• Southern Europe
• Unquote Data
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