PRIVATE equity deals roared back onto the corporate scene yesterday, with sector specialists predicting a rush of more to come.
There were three buyouts yesterday, totalling £910m in value, which all come hot on the heels of KKR’s £955m buyout of Pets at Home earlier this week.
The latest deals, all revealed yesterday, are led by a £440m Intermediate Capital Group takeover of legal services group CPA Global, which will leave the management with a 22 per cent shareholding.
In a deal yet to be completely finalised, Advent International, the global private equity firm, is acquiring Xafinity, the specialist pension services and employee benefits group, from Duke Street for around £190m.
And the fourth deal of the week comes from the US private equity group Warburg Pincus, which completed on a £280m buyout of Survitec, a maker of military equipment.
Industry veteran Jon Moulton, who has set up his own fund Better Capital, told City A.M. that many of the deals being completed were being pushed through because investors, such as Duke Street and Bridgepoint, needed exits.
“Also some private equity funds are running towards the end of their investment periods and they need to show investors they have a deal,” he added.
Simon Tilley, managing director of Close Brothers Corporate Finance, which has advised on a number of deals including Xafinity, said he was certain there were more deals to come.
“An important factor is that there is more stability and credibility in the credit markets,” he said.
Tilley added that companies often preferred to sell out to private equity than embark on an IPO – which Pets at Home had considered – because that route gave shareholders an outright exit.
“A sale is always preferable to an IPO but you do need some competitive tension,” he said.
City A.M. has been told that private equity funds specialising in the mid-cap sector have a total of around £10bn at their disposal whereas last year only £750m was invested in the UK market.
The flurry of deals came as private equity giant 3i reported a sharp reduction in debts, down £211m to £643m, giving it “substantially increased firepower” for acquisitions, although the firm said it remained cautious about the economy.