The UK drove a recovery in European private equity activity this year as UK buyout value doubled

 
Lucy White
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The UK established its dominance once again as Europe's leading buyout market (Source: Getty)

European private equity activity saw a rebound this year, thanks to a bull-run in the UK where the value of buyout deals almost doubled.

The total amount spent by private equity firms on new buyouts in Europe hit €90.2bn (£79.4bn), up 50 per cent from last year and on a par with pre-Brexit referendum levels, according to data from the Centre for Management Buyout Research (CMBOR) at Imperial College Business School.

This was driven by the UK, where total deal value rocketed from €14.7bn last year – approximately half the 2015 value – to €27.1bn this year.

"The uptick in activity is likely down to a ‘back-to-business mentality’ as investors have had 18 months to get comfortable with a new European backdrop," said Shaun Mullin of Investec, which co-sponsored the research along with private equity firm Equistone Partners.

"The run-up to – and particularly the period following – the UK’s Brexit vote saw investors pause and deals delayed, but the beginning of this year saw significant fundraising announced and strong deal activity coming through, some of which may have been pent-up from the referendum aftermath."

The five biggest UK buyouts of 2017

Company bought Buyer Seller Deal value
CPA Global, the intellectual property management company Leonard Green Cinven £2.4bn
Punch Taverns, the pub company Patron Capital and May Capital Bought from public markets £1.8bn
Parkdean Resorts, the holiday park operator Onex Partners Epiris and Alchemy Partners £1.4bn
Calvin Capital, the smart meter financing company KKR M&G Investment Management £1bn
NewDay, the consumer credit company CVC Capital Partners and Cinven Varde Partners £1bn

Private equity firms also managed to bring in the bacon when selling their companies, as 2017 saw European buyout houses generate more than €100bn from exits for the fourth year in a row.

The total reached €112bn, up 12 per cent from last year, across 436 sales. Trade buyers had bigger wallets, as they purchased €51bn of the year's total compared to private equity's €46bn.

“All exit routes have been open, including foreign buyers increasingly looking to buy European companies. The upshot of this is high-quality buyout houses generating strong returns for their investors who, in turn, are re-investing increasing sums back into the asset class," said Equistone's Christiian Marriott.

On average, the companies that were sold this year had been held by their private equity owners for 70 months, or almost six years. This is slightly above the usual five years, but seems to represent a growing emphasis on "patient capital" – or supporting companies further through their lifecycle.

The five biggest UK sales of 2017

Company sold Seller Buyer Deal value
Formula One, the auto-racing company CVC Capital Partners Liberty Media £6.4bn
CPA Global, the intellectual property management company Cinven Leonard Green £2.4bn
Host Europe Group, the website hosting company Cinven GoDaddy £1.7bn
Parkdean Resorts, the holiday park operator Epiris and Alchemy Partners Onex Partners £1.4bn
NewDay, the consumer credit company Varde Partners CVC Capital Partners and Cinven £1bn

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