European buyout activity to increase?

With pressure on corporate management to divest non-core assets and falling asset values, new research says activity in the European buyout market looks set to continue in 2003.

Opportunities for private equity in the European M&A market are expected to grow in the first half of 2003, according to a recent report produced by Cinven, the UK buyout house, in association with mergermarket – the M&A intelligence company.

The survey, which canvassed the views of over 180 managing directors at investment banks in Germany, France and the UK, revealed that 76 per cent expect to see an increase in private equity participation within the European M&A market in the next six months. This view is set against a backdrop of pessimism, as 47 per cent of the bankers foresee a further decline in the overall economic climate.

According to Cinven managing director, Robin Hall, European buyout activity going forward will be driven by “falling asset values, an increase in de-listings, and the pressure on corporate management to divest non-core assets.”

The report also predicts an increase of M&A activity in the manufacturing, business services and consumer sectors, as well as a rise in the number of middle market deals.

Cinven is itself an aggressive buyer of major assets in Europe, with recent acquisitions including its £820m purchase of NCP in May this year. It also recently realised a strong exit from betting business William Hill when the firm was listed at 225p per share in June this year. The firm surpassed the E3.5bn target total for its third buyout fund with a final close at over E4.3bn in December 2001.  Founded in 1977, Cinven has been totally independent since 1995 and focuses entirely on larger buyout transactions across Europe