Thanks to local divestments across the UK and Europe, there appears to be greater primary buyout activity, and deal activity edged up in the first half of 2014 compared with 2013, notes EY study.
In a report titled “Record high for IPO exits”, EY notes the UK continues its deal dominance, garnering 60 of the 159 deals across Western Europe in Q2 2014.
Strong deal activity
According to the EY report, European buyout activity was strong, with the total deal value in the first half of 2014 standing at €25.8 billion, compared with €23.6 billion in the first half of 2013. In terms of volume, 312 deals were clocked in the first half of 2014, which is well above 279 recorded in the first half of 2013 and the 281 clocked in the second half of 2013.
Corsair Capital was down by about 3.5% net for the third quarter, bringing its year-to-date return to 13.3% net. Corsair Select lost 9.1% net, bringing its year-to-date performance to 15.3% net. The HFRI – EHI was down 0.5% for the third quarter but is up 11.5% year to date, while the S&P 500 returned 0.6% Read More
The following exhibit highlights the strong uptrend in European buyouts, both in volume and value terms:
The EY report points out that the UK was home to 60 of the 159 deals across Western Europe in the quarter, followed by Germany with 19 deals. Interestingly, this is the fifth consecutive quarter that the UK has contributed at least twice as many deals as its nearest rival.
The EY report points out that the UK continued its consistent performance by accounting for 35% of all buyout value in H1 2014, when it generated €9.1 billion from 111 deals. Germany was the second-strongest market in terms of buyout numbers in Q2 2014, with 19 deals contributing €1.4 billion.
TMT witnessed a strong start, IPO volume remains robust
The EY report notes IPO volume remains robust. At 21 deals, IPO volume for Q2 2014 is the highest since 1998, and the quarterly value € 23.2 billion is a record. The report points out that while the IPO market remains strong, secondary buyouts continue to decline. As set forth in the following table, of the top 20 exits in H1 2014, 15 were IPOs and just two were secondary buyouts.
Focusing attention on individual sectors, the EY report points out that the TMT sector has had a strong start to 2014 as it clocked total buyout value of € 6.8 billion in the first half of 2014. The report highlights that the sector achieved this by garnering four of the six largest buyouts finalized in Europe so far this year: Scout24 (€2.0b), SkillSoft (€1.7b), Unit4 NV (€1.2b) and Trader Media (€740m).
As can be deduced from the exhibit above, the manufacturing sector was behind TMT with a total value of €4.8 billion in the first half of 2014. However, the retail sector witnessed significant drop-off in terms of both number and value of deals, with just 10 deals for a total value of €728 million.
The following table provides a sectoral view of the largest buyout deals in Western Europe for the first half of 2014