Deals

Buyout activity soars in Europe

In H1 2010, buyout firms injected €15.1bn of capital into European companies, in part a result of increased interest in the consumer goods and retail sector.

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In the first six months of 2010, buyout firms provided €15.1 billion-worth of equity investment in European companies, twice the figure reported during the same period last year, according to research by the European Private Equity and Venture Capital Association.

With approximately 800 deals conducted in the first half of the year, roughly half went towards growth capital “in more mature businesses”, the research revealed. In terms of deal value, buyouts dominated with 70 percent of the total. 

In regard to which sectors received the most attention from funds, “consumer goods & retail” topped the list with roughly a quarter (€3.6 billion) of the total amount invested. The research also noted that “business & industrial products”, a favourite sector during the boom years, fell to fifth place for the first half of the year.

Even for the largest buyouts, investments are strongly equity-driven and there is clearly renewed appetite for sectors such as consumer goods & retail, as well as large investments in European healthcare,

Javier Echarri

“Even for the largest buyouts, investments are strongly equity-driven and there is clearly renewed appetite for sectors such as consumer goods & retail, as well as large investments in European healthcare,” stated Javier Echarri, secretary general of EVCA.

Credit markets continue to thaw after the deep freeze brought on by the financial crisis, the research also revealed. In H1 2010, banks issued €8 billion-worth of leveraged loans, a 329 percent increase compared to the same period last year. 

“However, leveraged loan prices remain high,” stated the research, adding the “average pricing spread over Euribor stood at 433 basis points for pro-rata loans and at 498 basis points for institutional loans” as measured in July 2010.

Fundraising also picked up in the first six months of 2010, jumping 85 percent compared to the same period last year. A total of €11.7 billion was raised over 21 funds, compared to €10.2 billion raised over 26 funds in all of 2009.

Research also noted growth capital and mezzanine funds began picking up speed compared to buyout funds. Buyout funds accounted for 70 percent of all fundraising, down from an average of 90 percent during 2007 to 2009. 

With close to 1,300 members, the EVCA helps promote the interests of the European private equity and venture capital industry.