An Optimistic Private Equity Deal Environment in Western Europe* – August 2015

by Anthony Leung

  • 21 Aug 2015
  • PE

It would appear logical for private equity investors to take a more cautionary outlook with regards to Western Europe, given the current situation in Greece and the potential ramifications for financial markets. However, 2015 is likely to post strong numbers in terms of aggregate transaction value for the region, which currently stands at €59bn. For reference, 2014 and 2013 saw aggregate deal value at €61bn and €53bn respectively. Data from Preqin’s Buyout Deals Analyst allows us to further explore the key deal statistics within the region.

One significant development this year has been the large number of large cap buyout deals – deals that are valued at €1bn or more. At the time of writing, there have been 20 transactions recorded in Western Europe so far this year, already matching the total figure for 2014 as a whole. The largest deal has been the €5.5bn announced merger between Santander Asset Management, a portfolio company of General Atlantic and Warburg Pincus, and UniCredit, to form Pioneer Investments in April. Interestingly, this is the only buyout deal over €1bn within Spain. It is the UK and France that lead the way in terms of the number of large cap deals, each with five, followed by Germany, which has four. Therefore, it is of little surprise that the UK, France and Germany make up the majority of all deals (71%) and the largest proportion of total deal value (61%).

Looking at the industries in which deals have been taking place, industrials make up 27% of all Western European buyout deals for 2015 and have consistently contributed more than 20% in each year since 2006. Another prominent industry over recent years has been the consumer & retail sector, which this year has benefitted from South Africa-based GP Brait Private Equity acquiring fitness & leisure company, Virgin Active, and fashion retailer, New Look.

The rise in private equity-backed add-ons as a proportion of all deals is another noteworthy trend in the Western European buyout deal space of late; add-ons now account for 29% of all deals in the region, compared with 23% in 2014 and 21% in 2013. Of the 151 add-ons in the region recorded so far this year, 65 have occurred in the UK, 27 in France and 20 in Germany. The largest, however, occurred in Switzerland, which was the announced acquisition of TE Connectivity's Telecom, Enterprise and Wireless Businesses by CommScope Inc, backed by Carlyle Group, for $3bn.

* Preqin defines Western Europe as the following: Alderney, Andorra, Austria, Belgium, France, Germany, Gibraltar, Guernsey, Ireland, Isle of Man, Italy, Jersey, Liechtenstein, Luxembourg, Malta, Monaco, Netherlands, Portugal, San Marino, Spain, Switzerland and the UK.

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