Dealmakers expect bigger European private equity buyouts and more of them
Number of $5bn plus deals more than doubled in year to date
Uninvested cash has piled up
Private equity investors press for returns through asset sales
By Amy-Jo Crowley, Andres Gonzalez, Mathieu Rosemain and Anousha Sakoui
LONDON, Oct 22 (Reuters) -Buyout fund CD&R's keenly awaited 16 billion euro ($17.36 billion) deal to take control of Sanofi's consumer health unit, could herald an upsurge in big private equity transactions in Europe, investors and analysts say.
A record amount of uninvested capital at funds, cheaper financing as interest rates fall, and pressure for asset sales from investors seeking returns, are among the reasons the people cited for an upturn in deal activity and size.
As the trend gained momentum, on Monday a consortium of investors announced the acquisition of Britain's Nord Anglia Education in a deal that valued it at $14.5 billion.
"We do see big leveraged buyouts happening in Europe and there are already a few in the offing," David Gross, co-managing partner at investment firm Bain Capital, said.
"Private equity is getting bigger, we all have big pools of capital and can do large transactions."
Managing Director at Insight Partners Henry Frankievich singled out the technology sector, saying it was poised for "larger private equity-backed deals".
"The key driver behind this rebound is growth," he said. "Traditionally, private equity centred on optimising margins by cutting costs, but the current focus is on businesses with durable growth."
Already private equity-backed deal volumes in Europe, Middle East and Africa (EMEA) have jumped 41% in the year to date, versus the same period last year, according to Dealogic data.
Over the same period, the number of $5 billion-plus deals in the region has more than doubled compared with a year ago.
Globally, buyout deals were on track to finish the year at $521 billion, up 18% from 2023, with the rise driven by a higher average deal size rather than more deals, analysts at consultancy Bain & Co said in a report.
'DRY POWDER' IS GETTING OLD
Even with this year's recovery in deals, global private equity and venture capital funds held a record $2.62 trillion in total of total uncommitted capital as of July 10, according to S&P Global Market Intelligence and Preqin data.
Funds added $49.44 billion to their cash piles - or dry power - in the six months since December 2023, more than 1.7 times the amount added during the previous 12-month period, the analysts said.
"Right now, there are peak levels of dry powder in private equity, and that dry powder is getting older and older. Over 25% of dry powder out there is at least four years old. That's not very good for anybody," Douglas Hallstrom, director at Advent International said.
He added, however, the pace of deals was accelerating.
"We're seeing a re-energising of the transaction environment in general. Both smaller and larger deals will be carried by that," Hallstrom said.
While traders anticipate more European bank rate cuts that would make financing easier, and funds appear ready to invest, some dealmakers are unconvinced.
“There is a dichotomy, which is that people are sitting there and they are desperate to deploy capital but then they sit there thinking again and say: that's really risky for my portfolio," DC Advisory's European Executive Chairman Richard Madden said.
He added difficulty fundraising, the poor performance of some portfolio companies, and uncertainty over valuations on both the buy and sell-side meant people were still hesitant.
"When confidence is drained, you become risk averse, and that risk aversion continues to outweigh the pressure to deploy," Madden said.
Francois Jerphagnon, a member of private equity fund Ardian's executive committee and managing partner of Ardian France, also said caution persisted and it was only the strongest propositions that were succeeding.
"What we're seeing today is that in a complicated environment, the projects that are making progress are those that have the magic combination of resilience and growth," he said.
($1 = 0.9217 euros)
Big private equity deals are bouncing back https://reut.rs/3A95NP2
Reporting by Amy-Jo Crowley and Andres Gonzales in London, Mathieu Rosemain in Paris. Writing by Anousha Sakoui; editing by Barbara Lewis
免责声明: XM Group仅提供在线交易平台的执行服务和访问权限，并允许个人查看和/或使用网站或网站所提供的内容，但无意进行任何更改或扩展，也不会更改或扩展其服务和访问权限。所有访问和使用权限，将受下列条款与条例约束：(i) 条款与条例；(ii) 风险提示；以及(iii) 完整免责声明。请注意，网站所提供的所有讯息，仅限一般资讯用途。此外，XM所有在线交易平台的内容并不构成，也不能被用于任何未经授权的金融市场交易邀约和/或邀请。金融市场交易对于您的投资资本含有重大风险。
所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。
本网站上由XM和第三方供应商所提供的所有内容，包括意见、新闻、研究、分析、价格、其他资讯和第三方网站链接，皆保持不变，并作为一般市场评论所提供，而非投资性建议。所有在线交易平台所发布的资料，仅适用于教育/资讯类用途，不包含也不应被视为适用于金融、投资税或交易相关咨询和建议，或是交易价格纪录，或是任何金融商品或非应邀途径的金融相关优惠的交易邀约或邀请。请确保您已阅读并完全理解，XM非独立投资研究提示和风险提示相关资讯，更多详情请点击 这里。
