Surge in IPOs helps boost value of exits by European private equity

The value of European private equity exits has climbed from €55.4 billion in 2012 to €73.9 billion in 2013, new research finds.

An increase in the value of exits through IPOs in Europe has helped to boost disposal activity for private equity firms.

Findings produced by the Centre for Management Buyout Research (CMBOR), in partnership with Equistone Partners Europe and EY, finds that the European private equity exit market has grown by 26 per cent year-on-year.

The €73.9 billion (£61.3 billion) recorded for 2013, up from €55.4 billion in 2012, is the second highest annual total for six years.

The value of flotations reached €25 billion from 20 market admissions, a marked change from the one IPO which was closed in 2012.

Christiian Marriott, investor relations director at Equistone Partners Europe (formerly Barclays Private Equity), believes that it is encouraging to note an increase in the availability of funding from the debt market – evident in the value of refinancing and level of deal activity in 2013.

‘Sources of debt are becoming more diverse and it is encouraging specialist debt funds and other unitranche providers reaching down into mid-market buy-outs, mitigating the reliance of buy-out funds on clubs of lenders,’ he adds.

‘However, despite the many positive signs, especially the IPO market, we are still a long way of pre-crisis levels of deal activity and leverage in Europe.’

More on recent private equity exits:

Despite the rise in value of exits, there were fewer buy-outs during 2013 than 2012. The 521 private equity-backed deals completed in Europe in the last 12 months were worth €50.3 billion, down from the €54.2 billion in 2012 and lowest since 2009’s €20 billion.

On a county basis, deal flow in Germany (€11.6 billion from 64 deals) and the UK (€16 billion from 183 deals) represented 55 per cent of total value for the European market. France saw its value drop by 57 per cent to €6.6 billion over 2011, a year when it led Europe in terms of value and volume.

Sachin Date, private equity leader for Europe, Middle East, India and Africa at EY, says, ‘While public listings have been a viable exit route in the US for some 18 to 24 months, it has only been in the last year that IPO investors have begun welcoming new issues from Europe’s listed companies. Private equity has been quick to capitalise on this shift in sentiment.

‘As economic prospects continue to improve, the European private equity market is clearly making the most of the good conditions for exiting and returning capital to investors. However, it will need to be more innovative, looking frothier afield in its hunt for both new investment opportunities and corporate buyers, if it is to continue to deliver the strong returns it has historically been able to achieve.’

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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