Italy takes lead in European buyouts

Nineteen of the twenty largest buyouts in Q3 were completed in Continental Europe including multi-billion Euro transactions in Italy and Germany.

European private equity dealflow fell by a quarter in the third quarter of 2003 although a succession of large deals resulted in a 13 per cent increase in total deal value, according to data published by Initiative Europe.

The figures were buoyed by five E1bn-plus transactions, increasing total deal value completed in the quarter to E13.2bn.

Perhaps most surprisingly, the UK buyout market, normally a stalwart of European private equity activity, accounted for only ten per cent of total deal value in the three months to the end of September, compared with 44 per cent in the second quarter. Only TDR Capital and Capricorn Venture Partners’ E398m acquisition of PizzaExpress made it into the top twenty biggest deals completed during the quarter.

Italy accounted for the two biggest transactions in the third quarter led by the E3bn investment in SEAT Pagine Gialle by CVC Capital Partners, Investitori Associati, Permira and BC Partners. Carlyle’s E1.6bn acquisition of Italian aerospace business Fiat Avio was the second largest European transaction.

The outlook for Q4 suggests that the UK will figure more prominently in the top twenty largest completions. Debenhams’ public to private is set to be resolved in November and the sale of Scottish & Newcastle’s pub estate to private equity consortium Spirit Amber will also complete in Q4.

France, traditionally the largest Continental European buyout market, also saw its market share diminish. Only eight French buyouts were completed in the quarter, representing eleven per cent of the overall total.

The first nine months of 2003 have shown an increase in activity compared with the same period in 2002. 254 buyouts have been completed, nine per cent up on 2002, while the total value of buyouts is up 22 per cent to E41.6bn. “Looking ahead to the end of the year, in value terms, the market will probably still finish ahead of last year, indicating the shift in size of average buyouts across Europe,” said Colin Buffin, managing director of Candover, which sponsors the Q3 Barometer. “Buyout companies are now responding to changes in the European markets and we are seeing a strong pipeline of dealflow opportunities generated.'