European Private Equity Buyout Review First Quarter 2017 Fabrizio Bensch REUTERS
Table of Contents Europe s PE Buyout Market in Q1 2017 3 Invested and # Companies Financed 4 Top PE Buyout Deals 6 Investment by Company Location 7 Investment by Transaction Type 9 PE Investment vs. all European M&A 10 Investment by Company Sector 11 Buyout Funds Raised 12 Public and M&A Exits 13 Private Equity Returns 14 Explanatory Notes & Contacts 15
European Private Equity Buyout Market Activity in Q1 2017 European Buyout-PE Market Trends Deal-making activity in Europe s buyout and related private equity market showed a marked decline in the first quarter of 2017. With a total of 206 transactions valued at 12.0 billion, deal values did increase by 22% from Q1 2016. However, deal volumes decreased 36% from the same period last year, marking the fewest deals done since Q3 2009. The European top deals list was dominated by UK-based Neptune Energy Group, which received a 3.7 billion investment from CVC Capital Partners and Carlyle Group; and Poland-based Grupa Allegro, which secured 3.7 billion investment from Cinven Group, Mid Europa Partners, and Permira Advisers. In addition to a decline in private equity deal volumes in European companies on a year-over-year basis, investment activity also continued to decline as compared to European merger & acquisition activity overall. While the number of private equity deals reached a peak of 9% of the number of traditional merger & acquisition deals in Q1 2015, this percentage had declined to only 6% in the first quarter of 2017, a three-year low. European Buyout Fundraising A total of 13 European private equity buyout funds raised a total of just 3.5 billion in Q1 2017, the weakest quarter since Q3 2012. This represented a slow start to 2017, considering that European buyout funds raised no less than 34 billion in each of the past four years. European Fund Performance While investment activity was on the wane in 2016, the performance of European buyout funds showed steady positive performance, significantly exceeding public market comparators. Final data provided by Cambridge Associates shows European buyout funds with vintage years of 2000 or greater returned a since inception IRR of 12.8% as of year-end 2016. While this did lag behind these funds US counterparts, European buyout funds outperformed their public markets by a greater margin.
Deal Values ( Billions) Historical PE-Buyout Investment in European Companies: Deal Values European PE-buyout investment up 22% over Q1 last year. Second-strongest first quarter for European companies since Q1 2008. 100 90 80 89.2 92.3 70 60 50 40 47.8 45.6 44.5 50.2 49.1 46.3 30 20 10 0 20.8 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 2017 12.0 Q1 Q2 Q3 Q4
# of Deals Historical PE-Buyout Investment in European Companies: Deal Volumes First quarter deal volumes down 36% year-over-year, with the fewest companies financed in any quarter since Q3 2009 1,800 1,600 1,637 1,400 1,200 1,000 1,162 1,346 1,367 1,221 1,286 1,214 1,226 800 859 600 400 200 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 2017 206 Q1 Q2 Q3 Q4
Top European Private Equity Deals, Q1 2017 Portfolio Company Investors Rank Company Name Deal Value ( Millions) Location Sector Investing Firms (Disclosed) 1 Neptune Energy Group 3,653 London, UK Oil & Gas CVC Capital Partners, Carlyle Group 2 Grupa Allegro Sp zoo 3,058 Poznan, Poland E-Commerce Cinven Group, Mid Europa Partners, Permira Advisers 3 Parkdean Resorts UK Ltd 1,562 Newcastle, UK Hospitality & Entertainment Onex Corp 4 Telxius Telecom SA 1,275 Madrid, Spain Telecommunications KKR & Co 5 Generator Hostels Ltd 450 London, UK Hospitality & Entertainment Queensgate Financial 6 Travelopia Holdings Ltd 384 West Sussex, UK Hospitality & Entertainment KKR & Co 7 Nuevo Agora Centros Educativos 350 Madrid, Spain Education Providence Equity Partners 8 Vitalia Plus SA 276 Zaragosa, Spain Healthcare CVC Capital Partners 9 NNB Intressenter AB 226 Sweden E-Commerce Nordic Capital 10 Detskiy Mir PAO 154 Moscow, Russia Retail UK RFPI OOO
# of Deals PE-Buyout Dealmaking: Deal Volumes by Company Nation France takes 35% of European buyout deal volumes in first quarter, has been steadily increasing from a 24% share in 2013. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 2017 United Kingdom France Germany Spain Netherlands Sweden Italy Denmark Finland Other
# of Deals PE-Buyout Dealmaking: Deal Volumes by Company Region Western Europe sees 77% of transaction volumes in first quarter, substantially exceeding the 10-year average of 73% of all PE deals. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 2017 Western Europe Southern Europe Northern Europe Eastern Europe
# of Deals PE-Buyout Dealmaking: Deal Volumes by Transaction Type Minority equity investments rise to 29% of all deals in first quarter, up substantially from a 22% share recorded in 2015. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q1 2017 Acq. for Expansion Minority Equity LBO MBO Secondary Buyout Other
# of Deals PE-Buyout Dealmaking Versus All M&A of European Targets While conventional European M&A deal volumes in Q1 fell by 19% from the previous quarter, PE deal volumes fell by 21%, pulling PE s share of all M&A down to 6%. 400 350 300 250 200 150 100 50 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 # of PE Deals PE Deals as % of all M&A Activity 0%
European PE-Buyout Investment by Sector Consumer-related companies drive deal volume; deal values led by UK-based Neptune Energy, Poland-based Grupa Allegro. Q1 2017 Total # of Deals 50 45 40 35 30 25 20 15 10 5 0 $7 $6 $5 $4 $3 $2 $1 $0 Q1 2017 Total Deal Values ( Billions) Consumer Related Computer Software Industrial/Energy Business Serv. Internet Specific Financial Services Construction Manufact. Medical/Health Transportation Communications Other
( Billions) PE-Buyout Fundraising by European Funds A total of 13 European private equity buyout funds raised a total of just 3.5 billion in Q1 2017, the weakest quarter since Q3 2012. 50 45 40 47.4 45.9 35 30 34.8 34.4 25 20 15 10 25.8 18.8 5 0 6.6 2010 2011 2012 2013 2014 2015 2016 Q1 2017 3.5
# of Exits European PE-Backed Exits With only 61 disclosed exits completed in Q1 2017, exit volumes fell 42% as compared to both Q1 2016 and Q1 2015. Portfolio Company Investors Rank Company Name Deal Value ( Millions) Location Sector Investors (Disclosed) 1 Idcsalud SLU 5,763 Madrid, Spain Healthcare CVC Capital Partners 2 Booker Group 4,219 Warwick, UK Consumer-Related 3i Group PLC, Epiris Managers LLP, Montagu Private Equity LLP 3 PointPark Properties sro 2,409 4 Cerba Healthcare SASU 1,801 Prague, Czech Republic Saint-Ouen l'aumone, France Warehousing Logistics Laboratories Gic Special Investments Pte Ltd, TPG Capital Management LP, Ivanhoe Cambridge Idinvest Partners SA, PAI Partners SAS, Partners Group Holding AG, Public Sector Pension Investment Board 5 Oasis Dental Care Ltd 979 Bristol, UK Healthcare Bridgepoint Advisers 150 100 50 0 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 M&A Secondary Sale Public
Cambridge Associates: Buyout Fund Performance European private independent funds showing greater outperformance of public markets as compared to the United States. Europe United States 16% 16% 14.1% 14% 14% 12.8% 12% 10% 12% 10% 10.6% 8% 8% 6% 5.8% 6% 4% 4% 2% 2% 0% Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 0% Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Buyout Funds mpme: MSCI Europe Index Buyout Funds mpme: S&P 500 Index Source: Cambridge Associates, Standard & Poor's
Explanatory Notes 1. Data collected and analyzed by Thomson Reuters for this statistical report were drawn from a variety of sources including Thomson Reuters M&A databases, regulatory filings, press releases, and proprietary investor reports from European and non-resident fund managers. 2. Key statistical indicators (e.g., total disbursements, per quarter or per annum) are influenced by the fact that a substantial fraction of buyout and other PE deals are not fully disclosed. For instance, Euros invested in a given period pertain only to those deals with values that have been published or confidentially disclosed to Thomson Reuters. 3. Statistical data reflect all essential forms of buyout-pe deal-making, including control-stake acquisitions of businesses, minority equity investments, restructuring and special-situations transactions, mezzanine deals, acquisitions for expansion and other quasi-equity investments. 4. Fund performance data and public market equivalents are produced via the Cambridge Associates Benchmark Calculator, available through Thomson Reuters Eikon. Returns are for European and US buyout funds with vintage years of 2001 or greater, on a first cash flow basis, in Euros, from inception to the end of the indicated quarter, under published data mode Q4 2016. Pooled internal rates of return are net of fees, expenses and carried interest. CA Modified Public Market Equivalent (mpme) replicates private investment performance under public market conditions. The public index s shares are purchased and sold according to the private fund cash flow schedule, with distributions calculated in the same proportion as the private fund, and mpme NAV is a function of mpme cash flows and public index returns. 5. All current and previous years data is as of Monday, May 29th, 2017. Data is continuously updated and is therefore subject to change. All figures are in Euros unless otherwise noted. For further information on Thomson Reuters venture capital and private equity offerings, please visit us at: http://thomsonreuters.com/en/products-services/financial/venture-capital-and-private-equity.html For further reports on private equity, venture capital, and other asset classes, please visit us at: http://dmi.thomsonreuters.com Contributors to this analysis are provided with additional packages of data. If you would like to participate in the submission process, receive quarterly press releases, or have questions about our venture capital criteria, please contact us at: Jelena Marinovic Private Equity European Contributor Relations Lead E-mail: jelena.marinovic@thomsonreuters.com