EMEA cross-border deals pick up in Q1 – report

Private equity managers based in Europe, Middle East and Africa pursued more cross-border transactions from January to 15 March driven by mega-deals in North America.

Capital deployed into North American companies tripled to €15 billion or about half of overall investment activity for the period, according to S&P Global Market Intelligence’s EMEA Private Equity Market Snapshot.

Overall cross-border deal activity reached €18.3 billion across 216 deals, more than twice the aggregate deal value compared with the same period last year, €8.8 billion across 201 deals.

Companies in EMEA received €13 billion of fresh capital deployed across 837 deals, a 45 percent increase compared to the same period last year.

Meanwhile, total capital deployed increased 76 percent, to €31.3 billion from €17.8 billion. Deals remained roughly steady at 1,053.

Among North American deals were the €5.9 billion acquisition of New Jersey-headquartered commercial data provider Dun & Bradstreet by a group of investors that include Thomas H Lee Partners and CC Capital. CVC Capital Partners acquired Minnesota-headquartered IT provider ConvergeOne Holdings in all-cash transaction valued at approximately $1.8 billion.

Targeting US transactions is not surprising given the size of the market, said Jean-François Le Ruyet, a partner at Luxembourg-headquartered fund of funds Quilvest Private Equity. Le Ruyet noted private equity firms excel at add-on acquisitions and pan-European GPs are international-minded and well-positioned to go abroad.

“Prices paid for assets in Europe and the US are relatively rich by historical standards so you need to work on your companies to create value, and add-ons are one strategy.”

European GPs have set up US offices and ramped up hiring of investment staff in recent years in order to tap the deal opportunities there and to support the growth of their portfolio companies. Among them are London-headquartered firms Cinven and Hg, which opened New York offices in 2015 and this year respectively. Sweden-headquartered EQT and French-listed investment firm Eurazeo set up their New York outposts in 2016 and have targeted mid-sized companies.

Divestments for the period also increased. Total capital realised reached €72.4 billion, of which 91 percent comprised the acquisition of Ireland-based Shire’s equity stake for €66.3 billion by Japanese company Takeda Pharmaceuticals. Removing this transaction brings down total capital realised by EMEA-based GPs to €6.1 billion from €39.5 billion for the same period last year.