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Record European exits in H1 2015 reach €72.9bn

Exit values are back to pre-crisis levels.

European private equity exit values reached a record high of €72.9 billion in the first half of 2015, according to data published by the Centre for Management Buy-out Reseach and sponsored by Equistone Partners. The value of exits outstrips the previous pre-crisis record of €68.7 billion in the first half of 2007.

The number of exits made in the first half of 2015 totalled 215, down from 259 in the previous six months, but were greater in value, driven by €24.2 billion realised through 21 IPOs, and €30.4 billion through 81 trade sales. Secondary buyouts remained the most popular exit route with 102 transactions, according to the research. Overall, of the top 20 largest European exits, more than half were investments held for five years or less.

The UK was the most active European market with 92 exits totalling £21.6 billion ($34 billion; €30.5 billion), including divestments of Auto Trader, United Biscuits, Wood Mackenzie, New Look and Iglo Group, and 101 buyouts, including Advanced Computer Software, Sky Bet and Trainline, valued at £10.5 billion.

The value of buyouts in H1 2015 was almost half of exits at €37 billion, but the strongest first half for deals since H1 2008, when buyouts totalled €42 billion. The total includes the acquisition of New Look for £1.9 billion from Permira and Apax Partners by South Africa’s Brait, and six deals of more than €1 billion in Europe, including SIG Combibloc Group, Constantia Packaging, Sivantos/Siemens Audiology Solutions, Advanced Computer Software, Sky Bet and Senvion.

Clifford Chance partner and global head of private equity Jonny Myers noted during a media round table hosted by the firm that private equity has traditionally viewed an IPO as a “fragile” process. The usually narrow IPO window has been open for some time, he commented, adding that he expects the trend for IPO exits to continue into the third quarter.

“It’s remarkable how the capital markets have remained strong,” he said, commenting that the discount between IPO and sale price has reduced.

“It has been the year of the exit. There will be a need to replace those assets exited yet the major challenge is buying given the price competition. Debt is cheap and equity is plentiful,” Myers said.

In the competition to buy, PE firms tend to be disciplined on price in an auction, while LP co-investors are prepared to bid higher given different return targets, said Myers, who advised Cinven on its acquisitions of French diagnostics company Labco announced in May and following a failed IPO, and Germany’s Synlab announced in June following a competitive auction.