Deal value in EMEA region up 27 percent

Private equity deals in Europe, the Middle East and Africa have grown in size by 27 percent so far this year compared with the same period in 2003, according to a new report.

A new report from Dealogic, the investment banking analysis and systems provider, shows the value of private equity deals in Europe, the Middle East and Africa (EMEA) has grown to €67.0 billion in the period January-August 2004. This is a 27 percent increase on the €52.8 billion of deals recorded in the same period last year.

The report also challenges assumptions regarding the “quiet holiday period”, with July 2004 being the most active month, accounting for €18.7 billion worth of announced transactions. Deals announced during the month included the €3.5 billion privatisation of German real estate company GAGFAH by Fortress Investment Group and the €2.6 billion pending buyout of the UK’s Automotive Association by CVC Capital Partners and Permira.

The impressive deal value total also ensured that, to the end of August 2004, private equity accounted for 18 percent of all M&A activity in the EMEA region, compared with 16 percent in the same period of 2003. However, deal volume has not kept pace with the increase in value: over the same period, the number of transactions fell slightly from 827 to 823.

The survey confirmed the growth of secondary buyouts, with deals of this nature worth €12.7 billion between January-August 2004, compared with €9.7 billion in the whole of 2003. This means that compared with the same period last year, secondary buyouts have increased by 148 percent in value and 91 percent by number, and now account for 18 percent of EMEA private equity activity – compared with ten percent last year.

The public-to-private trend appears to be towards a much smaller number of larger deals: the value of PTP deals has edged up five percent, but the total number tumbled 59 percent. There have been only 29 PTP announcements this year versus 70 in the same period last year.

Exits via stock markets have grown considerably in 2004, with €7 billion raised from IPOs and follow-on offerings so far: around double the total raised in the whole of 2003. There have been 20 offerings so far in 2004, compared with just four last year.