Q1 2010 unquote" Private Equity Barometer

Emanuel Eftimiu
27 April 2010

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The unquote" Private Equity Barometer, published in association with Candover, shows deal activity (buyout, early stage and growth capital) in the previous quarter by volume and Euro value. Figures are also recorded on a quarterly basis going back to Q4 2008, allowing comparison of deal activity. Figures are based on preliminary quarterly data from Incisive Media's unquote".

Click to download the [asset_library_tag 1087,Q1 2010 unquote" Private Equity Barometer]

Highlights:

European Private Equity

Despite much optimistic rhetoric over the prospects for 2010, the year seems to have carried over the subdued atmosphere that prevailed through the end of 2009, with overall activity levels falling slightly in Q1 from 235 deals to 226.

There was some good news in the form of an increase in the aggregated value total, though the modest 2.6% rise from €10.3bn to €10.5bn reflects more accurately stagnation compared to the previous quarter rather than any sense of growth.

Further encouragement will be gleaned from a comparison with the first quarter of 2009, which reveals that the total value of investments is up almost three-fold year-on-year. If history is any judge, 2010 should therefore see significantly improved statistics over the year as a whole.

Buyouts

The first three months of 2010 saw a contrast in terms of volume and value trends in the buyout space. While activity declined by close to 12% from 78 deals to 69, ending three consecutive quarters of growth, aggregated value bounced back to the €9.2bn level that had marked a 12-month high in Q3 2009.

In truth the buyout market has remained at much the same level in terms of investment in each of the last three quarters. While this confirms that the market is not growing, it also reinforces the progress made since this time last year, with the respective volume and value totals up a staggering 47% and 369%.

The resilience displayed in value terms despite the drop in volume is not the result of deals at the very top end of the value spectrum skewing the figures. There was just one transaction in the largest size bracket - US house KKR's €1.1bn secondary buyout of pet retail chain Pets at Home from Apax Partners.

The strong value total was instead driven by a surge in the mid-market value range, which covers deals worth between €100m-1bn. This category saw an increase in activity from 14 transactions in Q4 2009 to 17 in Q1, while the value total almost doubled to reach its highest point in the sample at €6.6bn.

Of concern will be the decline witnessed in the smallest value segment, covering deals valued at less than €100m. This core area of the market witnessed drops of 18% and 19% respectively in the first quarter and recorded 51 transactions worth collectively €1.5bn.

The UK marked a fourth consecutive quarter of growth in volume with a rise of 20% from 25 deals in Q4 2009 to 30 in Q1, making it the most active region overall. The country was also the largest by value accounting for more than half of total value in the first quarter, jumping by 46% to €4.7bn.

Despite the sizable drops witnessed in the core value ranges the number of deals being sourced from family and private vendors recovered following a sharp dip in Q4. There were 39 buyouts from private sellers over the first quarter, 50% more than had been witnessed in the preceding quarter.