16 December 2018

Financial Times: UK toppled as Europe’s biggest private equity market

The UK has lost its crown as Europe’s biggest private equity market by deal value for the first time since 2011, as buyout executives have postponed big investments while they await greater clarity surrounding Brexit.

Deal value in the UK, which dropped a third to €21.4bn across 187 deals in the year to December 7, was exceeded by a total value of €23.5bn in the Netherlands, according to a study by the Centre for Management Buyout Research at the Imperial College Business School.

The UK had more than three times the deal volume of the Netherlands, the researchers said.

But of the top 10 largest European buyouts this year, just one — Silver Lake’s £2.2bn acquisition of internet property search company Zoopla — was in the UK.

“The UK has been the pillar of deal flow but people are favouring Europe for large transactions,” said Callum Bell, head of corporate and acquisition finance at Investec, which sponsored the research along with private equity group Equistone.

Other European countries have also benefited from inbound buyout activity, including France that saw a 35 per cent rise in value to €20.1bn, from a total of 114 deals, the research found.

The findings come at a time when private equity executives are increasingly worrying about a lack of clarity around Brexit.

Mr Bell said he expected global funds to be even more cautious about pursuing deals in the UK during the first half of next year.

He said buyout funds were in wait-and-see mode. “They believe there are better opportunities tomorrow than today.”

The European head of a large private equity group in Europe said he would expect the dynamics to change once “there is clarity one way or another on Brexit”.

Full article on Financial Times (subscription required)

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