Q2 Barometer: Robust Q2 performance bodes well for H2

Unquote team
25 August 2021

Tweet
Facebook
LinkedIn
Google plus
Send to

European private equity activity cooled in Q2 2021 from its record-breaking start to the year, but remained tremendously busy, with 929 deals amounting to EUR 90.2bn т according to the recently released Unquote Private Equity Barometer, produced in association with Aberdeen Standard Investments

Click here to download the full Q2 Private Equity Barometer

To put this in context, the quarterly average for European PE deal-making since Q1 2018 has been 850 deals worth EUR 63.5bn. And there is every reason to believe this momentum will continue: interest rates remain at historic lows, dry powder is at record levels, Covid-19 vaccination rates are rising in most regions and pandemic restrictions continue to be eased. Deal-makers are understandably looking ahead to H2 with confidence.

Buyouts were, as ever, the primary driver of PE value. However, the proportion of overall PE value attributable to buyouts in Q2 was somewhat lower than average, with buyouts accounting for 70% of total value versus a quarterly average of 81% over the past three years. The second quarter saw a total of 329 buyouts with a combined value of EUR 63.6bn.

Growth capital deals saw a spectacular increase in value in the second quarter. While deal volume remained unchanged on the previous quarter (476 deals), total value soared to EUR 25.4bn, an increase of 32% on the previous quarter (EUR 19.3bn) – underscoring the trend towards significantly higher deal values in this segment.

Aberdeen Standard Investments' head of Europe for private equity, Merrick McKay, anticipates sustained activity: "It's been a busy period for European PE managers, and we are seeing nothing to suggest new deal activity slowing down in H2. Healthcare and technology remain hot sectors, and we are starting to see increased activity in more traditional 'value' areas, as the longer-term impact of the pandemic diminishes and/or becomes easier to assess in many sectors. Exit activity is expected to remain high, encouraging and enabling investors to commit more to the PE asset class, which ultimately feeds into increased dry powder."