Private Equity-Backed Buyout Deals in Western Europe – July 2014

by Ciantelle Lawrence

  • 16 Jul 2014
  • PE

Western Europe has long been the standout region within the continent in terms of advanced economic and social development, but it is also a particularly defined hub for private equity investment activity. In 2014 YTD, 382 private equity-backed buyout deals with an aggregate value of €30.5bn have been announced in Western Europe. This represents an overwhelming 77% of all European deals in terms of number and 24% of all private equity-backed buyout deals globally. As for aggregate value, Western Europe has contributed 87% of the total value of European buyouts and 25% of the global aggregate deal value in 2014 YTD. 

Even within the sub-region, however, further disparity is displayed. Preqin’s Buyout Deals Analyst shows that UK-, France- and Germany-based portfolio companies account for the majority of buyout deals in Western Europe, contributing towards almost three quarters (72%) of all European buyout transactions in 2014 YTD and 73% since 2006. 

Meanwhile, investments in the aforementioned countries have accounted for 61% of aggregate deal size in 2014 YTD, with €18.5bn invested. Breaking this down by country, the UK has received the largest sum of capital, with an aggregate deal size of €8.8bn in 2014 YTD; meanwhile Germany has recorded €5.8bn and France, €3.9bn. 

In terms of value bands within Western Europe, large cap transactions (those valued at €1bn or more) accounted for 7% of all transactions in 2014 YTD, the same proportion witnessed for all European buyouts so far this year. The majority of investments in Western Europe fell into the small cap value band (deal values under €249mn) contributing 75% of the total number of deals in 2014 YTD. 

The industrials, consumer & retail and information technology sectors have experienced the largest number of investments in 2014 YTD, accounting for 24%, 14% and 14% of all private equity-backed buyout deals in Western Europe respectively. The three industries have been the highest performing sectors in terms of number of deals since 2011, which is unsurprising given a variety of contextual factors: a number of countries within Western Europe have a longstanding and rich heritage within the industrials sector, in particular Germany, Italy and the UK;  the demographic make-up within the highly developed Western European states features a relatively large middle and upper class population, which feeds positively into the consumer & retail industry; furthermore, significant levels of government expenditure within Western Europe in the information technology sector has resulted in a sophisticated developed state of IT infrastructure. All these provide great sector-specific investment opportunities within the region, thus supporting a robust deal flow which is likely to be sustained.

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