Eurozone Private Equity Investment

by Jonathan Parker

  • 23 Feb 2012
  • PE

As is the case with global private equity-backed buyout activity, investment levels in Europe have fluctuated greatly since the buyout boom-era, due largely to the credit crunch and sovereign debt crisis. An analysis of activity in the eurozone, excluding those countries which have joined since 2006 (Cyprus, Estonia, Malta, Slovakia and Slovenia), shows that the number of deals completed in eurozone countries has, since 2006, constituted around half of the total number of European deals.

The proportion of deals completed in the eurozone remained within 3% of the 50% level until the second quarter of 2007, when the number of deals in the region fell to 42% of the total number of European deals. This proportion then rose towards its previous level, before climbing to 58% in Q2 2009. In the second quarter of 2010, just 37% of European deals were completed in the eurozone, indicating an apparent relative lack of confidence in the region. This coincided with a downgrade of Greece’s credit rating and its first bailout in May 2010, which culminated in growing concerns about the stability of the common currency. In the following two quarters, over half of all European deals were completed in eurozone countries, although this level has since remained below 50%.

The aggregate value of deals in the area has been far more erratic than volume. In the fourth quarter of 2008, 75% of the aggregate value of European deals was completed in eurozone countries. This is in stark contrast to the second quarter of 2009, when just 13% of buyout activity in Europe by value could be attributed to the eurozone. In general, eurozone countries have seen a higher proportion of the aggregate value of European deals than of the volume of such deals, pointing to a higher average deal size for buyouts in this region. Other than the eurozone, the most active areas for buyouts in Europe were the UK, with 34% of the total volume and 25% of the aggregate value of European deals in 2011, and the Scandinavian countries of Sweden, Norway and Denmark.

Recent notable eurozone deals include the acquisition of SPIE, a French engineering firm, by AXA Private Equity, Clayton Dubilier & Rice and Caisse de depot et placement du Quebec. This deal was announced in May 2011 and was valued at €2.1bn. Also announced in May 2011 was the take-private acquisition of Gruppo Coin by BC Partners, valued at €1.4bn.

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