Q1 Barometer: Deal value hits four-year low

Deal value has plummeted 66% to its lowest level in almost four years, according to the latest unquote" Private Equity Barometer.

However, the collapse in deal value is largely due to the €1bn+ buyout market returning to its post-crisis norm, following a string of mega-buyouts last year.

Peter McKellar, partner and CIO at SL Capital Partners, said: "Clearly the European private equity industry paused in Q1 2013 across all segments and geographies. Following a spike in larger transactions in Q4 2012, that market reverted to the mean, bringing down total invested capital."

Indeed, deal value in Q1 2013 stood at €8.9bn, down from €25.7bn in the final quarter of last year. This is the lowest quarterly figure recorded since Q2 2009.

Click here to view the full Barometer.

While volume numbers saw a less steep decline, down 15% to 251 deals, this was the lowest figure recorded in almost a decade, highlighting the continuing weakness of the European private equity market. On a year-on-year basis, first quarter volume fell 27% while value dropped 48%.

The top end of the market is often volatile and skews figures – the first quarter of 2013 has seen just one €1bn+ deal, compared to seven in Q4 2012, which partially explains the fall in value.

McKellar continues: "Looking behind these numbers, after an active period of fundraising the leading European private equity funds have substantial available capital and are ready to commit to attractive investment opportunities. These groups continue to be selective, bu the inventory of deals in progress is increasing and we would expect this to filter through to increased activity as the year progresses".

The unquote" Barometer was made possible by SL Capital, sponsors of the stats going forward.

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