SBOs set to rebound

Olivier Marty
02 May 2012

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The recent quaternary buyout of French eyewear retailer Alain Afflelou by Lion Capital for an estimated €780m shows that the "pass-the-parcel" trend in private equity has not yet abated.

Secondary buyouts, BIMBOs, buy-ins and partial SBOs have shown a noticeable uptick since their 2009 trough. That said, the trend has somewhat subsided in recent quarters following the completion of sizeable primary operations, including the SPIE, Securitas, Gruppo Coin and Moncler deals.

Although primary opportunities might be returning to the market, the rise of SBOs across an array of sectors is unlikely to end soon: European SBOs amounted to around €36bn in 2011 and €4.6bn in Q1 2012.

Two main factors driving the trend have been widely documented. On the one hand, GPs eager to deploy capital raised in the market's heyday can be tempted by easily sourced assets, especially if they had scouted those businesses the first time around. These potential buyers can, in turn, attract a number of fellow private equity firms that are keen to rationalise their portfolios ahead of the next wave of fundraising.

The list of players having completed SBOs in recent months is indeed diverse, including the likes of Altor, Advent International, Apax, Astorg, AXA Private Equity, Charterhouse, Weinberg Capital Partners and LBO France.