UK buyouts hit record £20bn in 04

2004 was the busiest year for the UK market since 2000, according to statistics released by global professional service firm KPMG.

Last year saw 145 private equity-backed buyouts worth more than £10 million with a total value of £19.35 billion ($36.46 billion; €27.40 billion) in the UK, according to figures released by KPMG’s private equity group in London today.
 
This is an increase of 17 percent in number of deals and 24 percent in value compared to 2003's figures. The average deal size increased from £126 million in 2003 to £133 million in 2004, and the market was busier in terms of both total value and number of deals than in any year since 2000.
 
Charles Milner, a partner in KPMG's private equity group, said that because of the continuing intensity of demand for the best deals, 'activity continues to be governed more by supply of quality opportunities than demand from private equity investors.”
 
The year saw two buyouts by private equity firms valued at over £1 billion. In July, CVC Capital Partners and Permira paid £1.75 billion for the AA motoring company. In October, Charterhouse Development Capital bought out holiday and insurance group Saga for £1.35 billion.
 
However, it was the larger middle market sector, defined as £50 million – £250 million, which saw the most activity, with a record breaking total value of £6.32 billion.
 
Almost a quarter of the total market value, £4.564 billion, was made up of public to private transactions. These 15 transactions had an average value of £304 million, also a record.
 
'There's no sign this activity will let up, as the conditions going into 2005 are better than they were going into 2004,' Milner said in an interview with PEO. 'Both market conditions and the availability of funding point to a higher level of activity, and there doesn't appear to be anything acting as a drag on the market place.
 
'In the absence of a major shock [along the lines of 9/11], these conditions should continue for at least the first half of 2005.'
 
Milner identified factors such as the continuing interest from banks that is leading to increasing debt multiples and the reopening of the IPO market as instilling a 'feel good factor' in the buyout market.
 
KPMG LLP is the UK member firm of global professional services firm KPMG International, which provides audit, tax and advisory services. It operates 22 offices employing a total of 9,000 people in the country.
 
KPMG's private equity group tracks buyouts valued at over £10 million.