UK-based private equity firms are set to look away from banks when it comes to securing future debt packages, new statistics show.
UK-based private equity firms are set to look away from banks when it comes to securing future debt packages, new statistics show.
According to Grant Thornton’s latest Private Equity Barometer, 75 per cent of those surveyed expect to recieve part of their debt financing from sources other than banks.
Additionally, of the 75 per cent who expect to get debt from other areas, over a quarter say that more than 25 per cent of their debt will come from new avenues.
Mezzanine funds are showing an increasing interest in UK private equity deals, says Mo Merali, head of private equity at Grant Thornton.
He adds: ‘[This] partly explains why private equity respondents have achieved higher debt multiples on their investments than expected and are confident that these will remain stable in the year to come.’
The survey shows that on average private equity firms report they would achieve debt multiples of 3.3x EBITDA in the next 12 months, in-line with performance from the previous 12 months.
Looking away from debt, the number of respondnets who do not agree that the exit environment in the next 12 months is positive grew from 25 per cent to 38 per cent. Making up the rest of those questioned, 22 say it is a good environment, while 40 per cent are neutral.
Merali adds: ‘Few private equity professionals now speak of a good exit environment, but many are planning to make up lost ground by implementing performance improvement measures.
‘We are speaking to a growing number of private equity managers who welcome the opportunity to spend more time on portfolio value improvement while the exit environment is seen as poor.’
