Early-stage and Nordics stand out

The year 2011 was one of contrasts for European private equity. The quarterly unquote" Arle Barometer revealed that, though activity declined across all stages between Q1-Q4 - aggregate values decreased by 43% for early stage, 17% for expansion and 39% for buyouts - European PE was stable year-on-year, with values losing 2% between 2010 and 2011 and volume falling only 11%.

Industrials made a strong rebound over the year while financials, consumers, and healthcare declined after their 2010 surge. This trend reflects the impact of resumed financial instability on deleveraging as well as the gloomy prospects of growth in most European countries. However, it is also in line with the rise in lower mid-market deals, which continue their ascent underway since 2009 and now represent a quarter of all buyouts by value. This is because there were many industrial deals, typically sizeable, done in this segment.

A tale of four quarters
Figures for 2011 also include some surprising statistics: Firstly, while buyouts stabilised over the entire 2010-2011 period, each quarter of last year told a very different story. There was a peak in Q2 while Q4 recorded a modest €10bn amid fears of a challenging 2012. Capital expansion, which has witnessed a bumpy ride since 2009, began a steady downfall in Q2 2011. But early-stage volumes remained the most stable in 2011, ending the year with a robust 42 deals.

A rocky recent past masks early-stage's resilience. Not surprisingly, last year the most active markets for early-stage were DACH and the Nordics, where innovation and the financial environment offer satisfactory investment conditions. Sixteen deals were recorded in the former (about 30% of European total) in Q4, with nine in Germany alone. The Nordics achieved a respectable seven, with two deals making it in the top 10, and included the largest early-stage deal of the year, Heliospectra, backed by Industrifonden.

The robustness of early-stage is also reflected in the fund news: Norway and Germany were the sole big players to announce fund closes outside the UK.

Viking tenacity
Across all stages and sectors, the Nordics is also one of the most resilient regions since 2009, along with France and Southern Europe, as values increased continuously and by the greatest amounts since 2009. Their activity stands in sharp contrast with that of the UK and Benelux, which both plunged back after a promising increase between 2009 and 2010. Also, as shown in the recent unquote" KPMG Private Equity Index, Nordic investors are very confident about the state of their local economies and the functioning of private equity markets.

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• Topics
• Nordics
• Early-stage
• Southern Europe
• UK / Ireland
• Benelux
• DACH
• France