Big deals boost European Q3 data

A pick-up in top-end European buyouts has led to a twelve per cent increase in total deal value despite the number of deals falling by a quarter.

The rise in popularity of the larger European buyout has helped to produce an upturn in private equity investment in the three months to September 30.

Data published by Initiative Europe shows that a twelve per cent increase compared to the second quarter reversed a four-quarter decline which saw total transaction value fall by 40 per cent.

Total deal value in Q3 rose to E11.2bn, compared with E10bn in the previous quarter, the result of strong buyout activity across Europe. Deals completed in Q3 included PAI Management’s E1.5bn secondary buyout of French laundry services company Elis and Cinven’s acquisition of National Car Parks for E1.3bn.

The increase in transaction value is tempered by a sharp decline in deal volume. Having held fairly steady in the first half of 2002, Q3 deal volume fell back 23 per cent, suggesting that the increase in larger buyout activity is not supported by smaller transactions. Early stage and growth capital transactions both fell by 30 per cent, while buyouts fell only slightly, completing 70 transactions in the three-month period.

With many of the large summer transactions originally expected to complete in Q4, the last three months of 2002 had promised to deliver further increases in private equity deal value. However, recent uncertainty about the three largest LBOs in Europe this year, namely KKR’s E3.7bn acquisition of Legrand, Madison Dearborn’s E3.4bn acquisition of Jefferson Smurfit and the E2.3bn Texas Pacific-led acquisition of Burger King has left question marks over whether and when these deals will complete.