European deal activity up in 2014 for private equity IPOs
Private equity-backed initial public offerings remained a popular exit route in 2014, according to data published by the Centre for Management Buy-out Research (CMBOR), sponsored by EY and Equistone Partners Europe Limited. New deal activity by volume was higher than 2013, while value rose for the second successive year.
While 2014 did not see any deals above €5 billion, the €1 billion+ market saw sharp growth with 11 deals closing last year – comfortably surpassing 2013 figures.
The €100 million to €250 million bracket also saw growth to report its highest value and volume levels since 2008, while the €250 million to €500 million segment also reached the highest value since 2008.
“2014 was a particularly strong year for the mid-market, which has seen the highest level of deal activity since before the financial crisis. However, this activity has predominantly been led by the exit market; with a huge amount of dry powder ready for deployment across the mid-market buyout funds, the challenge for 2015 will be investing in the right assets at a fair valuation,” said Christiian Marriott, Investor Relations Partner at Equistone Partners Europe Limited.
Total deal values in 2014 reached €61.3 billion – above 2013’s €58.7 billion figure. Deal numbers were also higher: 613 for 2014 versus 562 in 2013. The UK accounted for €18.6 billion followed by Germany’s €11.2 billion and France’s €7.7 billion.
UK buyout value equalled £14.9 billion in 2014 compared to £15.1 billion in 2013.
Sachin Date, EY’s Private Equity Leader for Europe, Middle East, India and Africa (EMEIA) said: “PE-backed IPOs are at a record high since 1998 with 43 PE-backed IPOs worth €44 billion closing in 2014, as financial sponsors continue to capitalise on strong valuations. 2014 also recorded 188 trade sales in exit value terms (€32.2 billion) – the highest since 2011 – and 170 secondary buyouts. 2014 saw the highest value of refinancings ever recorded and has more than doubled since 2012 to the tune of €51.7 billion.
The exit value of above €101 billion is the highest since 2007 and this is only the third time it has crossed the €100 billion mark.
Going into 2015, the European private equity market is expected to steadily improve in line with progress made in the last two years. The pending deal pipeline is around €20 billion in the first few months of 2015.