Consumer Discretionary Deals

by Kouji Sonobe

  • 11 Aug 2011
  • PE

In Q3 2011 to date, there have been 24 private equity-backed consumer discretionary deals announced in North America with an aggregate value of $74mn. These figures represent a slow-down in the value of consumer discretionary deals being entered into by private equity firms, as in the first half of 2011 an aggregate value of $12bn from 144 consumer deals was announced, the strongest start to the year for private equity firms in the consumer sector since 2007. The reduction in activity within this sector can be related to the decline in consumer spending of 0.2% in June, the first monthly decline since September 2009.

Private equity-backed European consumer sector deals have also seen a decrease; however not as dramatic as North American numbers, with 30 deals with an aggregate value of $3.9bn being announced in the quarter to date. Similar to US data, the first half of 2011 has seen the strongest start for both number and aggregate value of consumer sector private equity deals being announced since 2007.

Notable consumer sector deals that have been announced so far this year include the $2.8bn privatization of BJ’s Wholesale Club by CVC Capital Partners and Leonard Green & Partners; the acquisition of a 44% stake in Russian hypermarket chain Lenta by an investor consortium including TPG, VTB Capital and the European Bank for Reconstruction and Development.

As governments throughout Europe and North America predict a slowdown in growth in coming quarters, it is likely that in the second half of 2011 deal-flow in the consumer deals sector will witness a decline from the strong consumer private equity deal figures seen during in the first half of the year.

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