Buyouts dominate European PE market

A strong buyout market is driving European private equity while early-stage and development capital investment activity has been subdued, according to figures released today.

Initiative Europe’s Q3 2004 Barometer survey found that, although the value of transactions in Europe's private equity market is down on the second quarter of this year, it is still significantly higher than figures for the same period in 2003.
The report, sponsored by European buyout house Candover, found that the total value of European private equity transactions in the third quarter of 2004 was €21.7 billion ($27.6 billion), up 43 percent on the same three-month period of 2003. The total value of transactions during the first nine months of the year stood at €60 billion, 27 percent higher than the first three quarters of 2003. However, the number of deals completed has declined from 283 in the third quarter last year to 207 during the same period of 2004.
Julian Longhurst
, head of research at UK-based Initiative Europe, which published the report, noted that in the third quarter the market was 'down substantially in expansion and early stage deals', but had been propped up by the buoyancy of the buyout market.
One hundred and thirteen buyouts took place during the third quarter of the year – down six percent from the previous quarter, but up 14 percent from the 99 that took place during 2003's third quarter. Buyouts accounted for more than 95 percent of the private equity market, with a total value of €20.7 billion. This was a jump of 42 percent from their value of €14.5 billion in the third quarter of last year, and similar to their value of €21.0 billion in the previous quarter.
Families and private vendors replaced corporates as the most prolific source of buyouts in the quarter. The number of secondary buyouts was up by 20 percent on the previous quarter, continuing an established trend.
The UK market has also been a significant factor in the continued strength of the market, accounting for transactions worth €10.1 billion – almost half the total by value – and 11 of the largest 20 buyouts.