The Promising Deal and Exit Environment of the European Union – May 2015

by Philipp Kuny

  • 14 May 2015
  • PE

Preqin’s Buyout Deals Analyst shows that there have been 311 private equity-backed buyout deals in the European Union (EU) so far this year, with an aggregate value of €26.3bn. The UK, France and Germany constituted 60% of the number of deals and 52% of the total deal value overall.

The UK has historically had the most dominant private equity market within the EU and appears to remain at the forefront of EU-based private equity investments, already accounting for 100 deals so far this year with an aggregate value of €6.5bn. France and Germany account for 50 and 38 deals with an aggregate deal value of €6.1bn and €1.1bn respectively. These figures appear to be in-line with historical trends within the EU, whereby the three major players of the UK, France and Germany dominated the sector, accounting for 65% of the market in terms of the number of private equity-backed buyout deals in the EU since 2006, and 62% of the aggregate deal value.

Preqin data shows that the economically shaky countries of Southern Europe are seeing more deal activity, with Italy and Spain accounting for 8% and 5% of all EU-based private equity deals in 2015 YTD, compared with 6% and 4% in 2014. Spain even accounts for the largest EU-based private equity deal of the year so far: the announced merger of Warburg Pincus and General Atlantic-backed Santander Asset Management with Pioneer Investments. The merged group is valued at about €5.5bn.

On the other hand, the eastern part of the EU has experienced a somewhat slow start with regard to number of deals in 2015 YTD. There have been eight private equity-backed investments in the region so far this year, compared with 13 deals announced in the same time period last year. However, the aggregate value has surpassed the value of deals witnessed between January and mid-May 2014. At this time last year, aggregate value stood at €312mn, while in 2015 YTD the total value amounts to €383mn – though this is largely due to the €315mn secondary buyout of Hungary-based Partner in Pet Food by Pamplona Capital Management from Advent International.

2014 saw the highest aggregate deal value and second highest number of private equity-backed buyout deals in the EU since 2007. There were 1,019 private equity-backed buyout investments valued at an aggregate €62bn last year (Fig. 1).

The number of exits is another cause for an optimistic outlook for the private equity industry in the EU. 2014 recorded the highest number and aggregate value of private equity-backed exits in the EU on record, with 568 exits valued at an aggregate €101bn. This positive trend continued into 2015: Q1 this year accounted for a record-breaking first quarter, representing the highest number of exits (141) as well as the largest aggregate exit value (€34bn) – an increase of 17% in terms of the number and 57% in aggregate exit value on Q1 2014’s figures. Such a robust exit environment means more capital distributed to LPs, who then can commit to new private equity funds, propelling the whole private equity industry cycle.

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