14 corporate finance
UK dominates private equity-backed buyouts
The total value of European private equity buyouts has decreased at the start of 2012, with 139 deals totalling €13 billion completing this quarter, according to the latest data published by the Centre for Management Buyout Research (CMBOR), sponsored by Equistone Partners Europe and Ernst & Young. This compares with the same volume of deals (139) in Q4 2011, totalling €14b, and 608 buyouts totalling €61.5b for the whole of last year.
The UK has returned to dominance, accounting for nearly half of the total number and combined value of private equity-backed buyout deals in Europe this quarter. This represents the largest share of the buyout market held by a single country in any given quarter for almost 10 years (since Q3 2002). Remarkably, not usually known for deal flow, the next largest countries by value this quarter were Belgium, recording a total of €2b deals, and Switzerland recording €1.6b.
These account for 15% and 13% of the total, respectively.
HIGHLIGHTS
• UK prominence: The UK recorded 62 deals with a total value of €6.3b, accounting for 48% of the overall value across Europe (€13b). This compares to France which, following a surge in deal activity in 2011 totalling €14.6b and representing 24% of the market, amounted to just €531m through 24 small transactions this quarter.
• Increase in P2Ps: The number of public to private buyouts has increased with eight deals completed this quarter, compared to 13 in the whole of 2011 and 21 in 2010. These were predominantly smaller deals averaging €183m including the buyout of Belgium’s Omega Pharma for €848m in February and the acquisition of Swedish financial software company
Orc Group by Nordic Capital for €224m in March.
• Debt contribution: The structures of European buyouts over €100m showed an average debt contribution of 42% this quarter compared to 44% in 2011 and a low of 37% in 2010, indicating an easing in the European debt markets in the past year. However, this is still significantly lower than an average of 57% recorded for buyouts in 2007.
• Exits slow: The level of exits in the first quarter of 2012 was fairly low compared to the past two years. 73 exits totalling €12.4b in Q1 2012 equated to 19% of the overall volume of exits in Europe in 2011 (378) and just 16% of the total 2011 value (€77.5). Compared to 2010, exit levels this quarter equated to 24% of the total volume (300) and 20% of the value (€61.3b).
• The largest buyouts this quarter were: The acquisition of Iceland Foods by a consortium led by Iceland’s chief executive Malcolm Walker for €1.7b, the €1.6b sale of Orange Communications by France Telecom in February and the sale of Taminco, a global player in the production of functional chemicals and agro sciences technology, by CVC Capital in February for €1.1b.
High-growth SMEs expand by a third
Despite continued turmoil in the stock markets, the worst recession in 60 years and a faltering eurozone, there are more than 2,000 small and medium-sized businesses demonstrating high levels of growth across London and the South East, according to Experian research commissioned by Business Growth Fund (BGF). This equates to 17% of the small and medium-sized businesses with a turnover of between £2.5 million and £100m based in the region.
Although the BGF Barometer highlights that fast-growing companies can be found across all regions and in a diverse range of sectors, the highest proportion is located in London and the South East.
These ’high-growth’ companies – all with turnovers of between £2.5m and £100m – have each expanded by at least 33% in the past three years and demonstrate the underlying resilience of UK entrepreneurism.
The BGF Growth Companies Barometer identifies a total of 25,533 companies with turnovers of £2.5m-£100m, almost half of which (12,958) of are based in London and the South East.
The Barometer tracks the performance of these SMEs over a 10-year time period. Although the size of this population has remained consistent since 2000, the proportion of high-growth companies in London and the South East has declined by 11% in the past three years.
BusMagAdvert-may 2012:Layout 1 09/05/2012 17:47 Page 13
Marion Bernard, regional director of BGF, commented: “This data highlights that despite challenging market conditions, there is a steady base of UK SMEs that continues to thrive across the UK. It demonstrates the resilience of the group and the underlying quality of UK entrepreneurship. This is good news for the overall UK economy as these companies play a significant role in job creation and innovation and are a critical part of the economic recovery.
“We apply experience and energy to achieve effectiveness.” Sean Kelly
Partner, Corporate and Commercial
sean.kelly@
lamportbassitt.co.uk
www.lamportbassitt.co.uk www.businessmag.co.uk THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – JUNE 2012
“As growth capital investors in high-growth companies, we are encouraged by the fact that there is a clear addressable market. However, we are also mindful that there is room for improvement. The question for us is how to expand the number of high-growth companies and help those that are already demonstrating that level of growth move further, faster?
“The past two years have seen in the region of 70 investments of growth capital made into UK companies of this nature. Clearly there is scope for much more and we would certainly hope to make about 25 investments this year, and 30-40 investments per year in the longer term.
“In commissioning this data our aim is to create a new and additional measure of economic performance of mid-sized SMEs. Our hope is that over time it may even become aspirational for business owners and entrepreneurs as a way for them to measure and benchmark their own performance.“
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