Buyouts slump to crisis levels in first quarter

Michael Bow
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PRIVATE equity buyout activity in the UK slumped to its lowest level since the depths of the financial crisis in the first quarter of this year, data out yesterday revealed.

Britain notched up just €3.8bn (£3.2bn) worth of deals in the first quarter, the lowest level recorded since the final quarter of 2009, according to figures published by the Centre for Management Buyout Research. Just 33 deals were completed, compared to 68 this time last year.

The slump reflects an overall decline across Europe, with the total value of buyouts in the first three months of the year down 21 per cent versus last year at €11.1bn.

On a quarterly basis, the figure represents a 17 per cent decline against the final quarter of 2012.

The UK’s slowdown has also helped close the dealmaking gap between Britain and its closet rival France.

France accounted for a third of total activity in the quarter with 30 deals, but at much smaller values. Total deal value for France over the three months was just €53m.

Sachin Date, private equity leader at Ernst & Young, which sponsored the research said: “The private equity buyout market across Europe continues to be led by the UK but France has recovered from low levels of activity and is not far behind in terms of deal volumes.

“The size of the market has reduced and this reflects the low levels of confidence from the second half of 2012 materializing in low levels of deal completion.”

The fall in buyouts has run counter to roaring public equity markets since the turn of the year, which have sent stock indices to record highs.

But three floats of private equity-owned firms last month, including Esure and Countrywide, could point to a healthier market next quarter. “As long as the IPO market remains open, we expect to see more private equity-backed companies make it to a public listing this year,” Date said.