The UK management buyout market completed a record year in 2005, according to latest figures from KPMG’s Private Equity Group.
There were 162 buyouts in excess of £10 million completed in 2005 overall, with a total value of £24.91 billion (€36.25 billion; $43 billion), a 27 percent increase in value over 2004 figures and the highest value of deals recorded in a single year according to KPMG. There were 154 deals completed with a total of £19.61 billion in 2004.
2005 was all about the larger end of the market, with the top ten deals accounting for about 44 percent of the deal value.
Mick McDonagh, corporate finance partner, KPMG Private Equity Group
The strongest area of activity was in the larger deals segment, especially transactions involving assets valued in excess of £100 million. For the largest buyouts, with a transaction value of over £250 million, the total value of activity recorded was £16.97 billion. And for the larger mid-market bracket, which KPMG identifies as covering deals between £100 million and £250 million, a total of £4.6 billion was recorded for the year.
The figures include five deals valued at over £1 billion in 2005: bingo operator Gala
, owned by private equity firms Candover
, acquired bookmaker Coral Eurobet
for £2.18 billion in October; the public-to-private of Northern Ireland-headquartered pharmaceuticals firm Warner Chilcott
by DLJ Merchant Banking
and JP Morgan Partners
for £1.672 billion in September; UK supermarket chain Somerfield
, acquired by Apax Partners
, Barclays Capital
and Robert Tchenguiz
’s investment vehicle R20 Limited
for £1.203 billion in October; TDR Capital
and Sun Capital
’s £1.07 billion purchase of a number of closed life assurance funds from financial services group HHG
in the second quarter; and Apax Partners
’ £1.055 billion acquisition of foreign exchange group Travelex
McDonagh: more FTSE companies within PE reach
, corporate finance partner at KPMG’s Private Equity Group, which tracks UK buyouts valued at over £10 million, said in an interview that the impetus had been carried by value as volume had only increased by approximately 5 percent. “2005 was all about the larger end of the market, with the top ten deals accounting for about 44 percent of the deal value,” said McDonagh.
Public-to-private transactions, with a total value of £7.362 billion in 2005, represented over a quarter of the market added McDonagh. “You are going further and further up the FTSE in terms of what is within reach,” he said. “There is no question that private equity houses could easily club together and fund a £3 billion plus UK deal right now.”