LBOs on the up

Continental restructuring has boosted Europe’s LBO market by almost double over the last six months.

Leveraged buyouts (LBOs) have roared back after a poor showing at the end of last year.

Statistics out today from Capital DATA Loanware show that firms raised $13bn of LBO debt over the first quarter of 2001, almost twice as much as the $6.87bn raised in the previous quarter.

Overall, 26 LBO deals were signed, and the top arranger was Lehman Brothers, which managed $2.45bn worth of LBOs.

Neither the rising cost of leverage loans nor bank consolidation has been able to keep the buoyant LBO market down.

The average cost of leverage loans has risen over the past year by about 25 basis points and the reduced number of debt suppliers gives each bank a more competitive advantage for deals.

But the sheer volume of corporate restructuring on the continent has created opportunities for buyouts and spinoffs, which has boosted LBO activity.

The biggest European LBO so far this year has been Allianz Capital and Goldman Sachs Private Equity's purchase of German gas processor Messer Greisheim from French pharmaceutical company Aventis. They secured a E1.8bn leveraged package to finance the deal, which was arranged by Goldman Sachs, HypoVereinsbank, RBS and JP Morgan.