Billion-euro deals rise among Europe's private equity firms

It had the fewest deals in at least 10 quarters completed over the three months to June 30. But the number of deals over €1 billion also hit a 10-quarter high, according to SL Capital Partners’ latest Private Equity Barometer.

Stephen Lloyd, global head of private equity at law firm Allen & Overy, attributed the uptick in sizeable deals to buyout firms increasingly looking to club together on deals and the rise in co-investments, in which limited partners invest alongside a private equity buyer.

Italy, which has undergone something of a renaissance in terms of buyout activity in 2016, accounted for four of the 10 largest buyouts to take place across Europe in the second quarter.

The largest transaction in the country was European private equity firm Investindustrial’s €1.3 billion acquisition of Italian baby product and healthcare manufacturer Artsana. Another big deal was buyout giant CVC Capital Partners’ acquisition of Italian gaming business Sisal from Permira, Apax and Clessidra in a deal worth €1 billion in May.

Buyout executives and advisers predicted the return of more billion-euro buyouts – a rare sight in Europe since the financial crisis – earlier in the year. Tom Whelan, a partner at law firm Hogan Lovells, told FN’s sister publication Pivate Equity News in April: “There is a stronger pipeline of deals in the €1 billion-plus space than we have seen in recent years. It wouldn’t be a surprise if a bigger proportion of deals done this year are in the large cap space.”

At the other end of the market, small-cap deals in the UK also enjoyed a pre-referendum bump in the second quarter. SL Capital Partners wrote in its report that “the referendum may itself have acted as a deadline for deals to be completed, as the UK outpaced all other regions in volume terms, rising from 27 to 39 buyouts”.

Graeme Gunn, a partner at Edinburgh-based SL Capital Partners, said: “The mid-market seems to have taken the brunt of the EU-referendum impact in Q2.

“Small-cap deals held up as they typically have less exposure to export markets, but the private equity funds were more cautious in the mid-cap that would have some exposure to trading with the eurozone.”

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