European Private Equity Buyout Review
FIRST QUARTER 2019 Table of Contents
Europe’s PE Buyout Market in Q1 2019 3 € Invested and # Companies Financed 5 Top PE Buyout Deals 7 Europe by Stage 8 Investment by Company Location 9 Investor Nationality 11 Investment by Company Sector 12 PE Investment vs. all European M&A 13 European Dealmaking Abroad 14 Buyout Funds Raised 15 PE Buyout Backed Exits 16 PE Buyout Returns 17 Explanatory Notes & Contacts 18
2 European Private Equity Buyout Market Activity in Q1 2019
European PE Buyout Market Trends
Europe’s buyout and related private equity market saw a total of €13.8 billion invested in 325 rounds of financing throughout the first three months of 2019. In round value terms this marked a decrease of 35% from previous year’s totals, however volumes were up 53% and this was the most active Q1 since 2015.
The European Top Rounds list was initially led by the planned takeover of Munich-based digital marketplace operator Scout24 by U.S.-based firms Hellman & Friedman and The Blackstone Group, a deal that has since fallen apart after failing to secure shareholder approval. The new top round was the €3.0 billion cash acquisition of London-based satellite operator Inmarsat by a consortium including Apax Partners, Warburg Pincus, Canada Pension Plan Investment Board, and Ontario Teachers’ Pension Plan, as well as the €2.2 billion purchase of Pullach-based IFCO SYSTEMS, a reusable packaging manufacturer, by Triton, and Luxinva, a subsidiary of the Abu Dhabi Investment Authority.
Foreign fund participation in European PE deals declined in Q1 with involvement in just 16% share of total financings while local fund involvement was up to 88%. U.S. based investors were the most active in the quarter, with involvement in 37 rounds.
While European buyout deal volumes were up 53% from 2018 levels, European M&A activity declined by 18% over the course of same period, resulting in the share of PE deals’ of total traditional M&A increasing from 5% to 10%, a portion that hasn’t been seen 2000.
European PE Buyout Fundraising Trends
European buyout firms raised a total of €9.6 billion across 16 funds during the first three months of 2019, an decrease of 58% year-over-year following the sizeable €22.9 billion raised throughout the first quarter of 2018. At the top of the list was the €4.0 billion close of Astorg’s Fund VII, which closed in January above its initial target of €3.2 billion and will target primarily European B2B companies with values between €200 million and €2 billion. Other substantial fundraises during the quarter included the €1.4 billion January closing of The Carlyle Group’s fourth European Technology Partners fund, as well as the €1.0 billion March closing of Keensight Capital’s fifth Growth Buyout Fund.
3 European Private Equity Buyout Market Activity in Q1 2019
European PE Trends by Region
Companies headquartered within France were the most active in the quarter in terms of deal volumes, with 112 deals representing a 34% share of the regional total. From an investment value perspective, at €2.3 billion, these round values placed it in third for the quarter. The United Kingdom ranked first in the value rankings and second in volumes, with €6.6 billion of financing spread across 98 rounds. Germany placed second in values and third in volumes, with €2.5 billion being invested across just 32 rounds.
European PE Exit Trends
European PE-backed companies saw a total of 63 exits completed throughout the first three months of 2019. In line with the usual levels, exits were fairly evenly split between strategic trade sales and secondary buyouts from other firms, with exit volumes of 31 (46%) and 36 (54%) each.
European PE Trends by Sector
Industrial/Energy and Communications companies were the main driving force behind European PE buyout investment values in Q1 2019, with rounds valued at €3.3 billion (24%) and €3.2 billion (23%) respectively through to the end of March. Computer Software and Consumer Related business were the most active in the period with deal volumes of 55 (17%) and 48 (15%).
European Fund Performance
Data provided by Cambridge Associates showed European buyout funds with vintage years of 2000 or greater returned a since inception IRR of 13.3% as of the end of Q4 2018, staying in line with their U.S. counterparts and well above public market equivalents which saw since inception returns of just 5.0% during the same period. Returns have been steadily climbing since the end of 2013, which had a 12.3% yield.
4 Historical Investment in European Companies: PE Buyout Deal Values European companies saw buyout and related deal values of €13.8 billion in Q1, down 35% from the same period last year and 27% from the same period in 2017.
€ 180
€162.5 € 160
€ 140 €128.9
€ 120
Billions)
€ € 100 €96.1 €90.0 €90.7 €84.8 € 80
€ 60 €56.4 €56.8 €56.9 €51.5 €51.8 €47.9 €46.8 €44.0 €45.8 €43.5 € 40
€34.3 €31.9 PE Deal Values ( Values Deal PE €21.4 € 20 €13.8
€ 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 Q2 Q3 Q4
5 Historical Investment in European Companies: PE Buyout Deal Volumes A total of 325 buyout and related private equity deals were completed during the first three months of 2019. Against the drop in values throughout the period, these volumes were up 53% from the previous year.
2,000 1,858 1,800 1,639
1,600 1,553
1,400 1,339 1,355 1,364 1,284 1,306 1,246 1,265 1,233 1,206 1,200 1,166
1,000 972 912 865 800
609
600 576 558 # of PE Buyout Deals Buyout PE of #
400 325
200
0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 Q2 Q3 Q4
6 Top European Private Equity Deals First Quarter 2019
Portfolio Company Investors Deal Value Rank Company Name Location Sector Investing Firms (Disclosed) (€ Millions)
London, United Apax Partners, Warburg Pincus, Canada Pension Plan Investment 1 Inmarsat €2,995.9 Inflight Broadband Kingdom Board, Ontario Teachers’ Pension Plan
2 IFCO SYSTEMS €2,209.9 Pullach, Germany Packaging Solutions Triton, Luxinva
Nelson, United 3 Daisy Group €1,163.8 Internet Communications Ares Management Kingdom Alternative Investments 4 eFront €1,149.1 Paris, France BlackRock Software
5 Avito €1,016.5 Moscow, Russia Digital Advertising Naspers
Reading, United 6 WSH Investments €868.6 Food Services Clayton Dubilier & Rice Kingdom London, United 7 DS Smith – Plastics Division €517.5 Plastics Manufacturing Olympus Partners Kingdom
8 Veeam Software €438.7 Baar, Switzerland Backup Solutions Insight Venture Partners, Canada Pension Plan Investment Board
Maastricht, 9 Q Park Operations €400.0 Parking Operator Sumitomo Corp Netherlands Glasgow, United 10 Weir Flow Control €317.1 Pump Manufacturer First Reserve Kingdom
7 PE Buyout Dealmaking: Deal Volumes by Transaction Type Acquisition for expansion stage deals continued to increase their share in the first three months of 2019, with 131 rounds representing 40% of overall volumes, a share that has been steadily growing since 2004 when it was only 5%.
100%
90%
80%
70%
60%
50%
40% % Rounds of % 30%
20%
10%
0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019 Control Stake Minority Stake Acquisition for Expansion Secondary Buyout Other
8 European PE Buyout Rankings, by Nation
European Rankings – First Quarter 2019
Round Values Round Values # of Rounds # of Rounds Rank Nation % Change (€ Millions) (€ Millions) % Change Q1 2019 Q1 2018 Q1 2019 Q1 2018
1 United Kingdom 98 60 63.3% 6,635.3 4,443.0 49.3%
2 Germany 32 27 18.5% 2,540.2 1,565.9 62.2%
3 France 112 65 72.3% 2,349.8 147.1 1,496.9%
4 Netherlands 18 19 -5.3% 1,294.8 14,382.1 -91.0%
5 Switzerland 3 3 - 438.7 16.7 2,527.1%
6 Luxembourg 4 2 100.0% 257.4 - -
7 Spain 16 9 77.8% 115.1 367.1 -68.6%
8 Poland 4 2 100.0% 100.0 - -
9 Ireland 7 1 600.0% 45.3 67.7 -33.1%
10 Liechtenstein 1 - - 26.2 - -
9 PE Buyout Dealmaking: Deal Volumes by Company Nation Companies headquartered in France saw their share of all buyout activity return to the top spot with 34% of all volumes in the first quarter of 2019, up from a 26% share throughout the entirety of 2018. UK-based companies remained flat at 30%.
100%
90%
80%
70%
60%
50%
40%
30% # of PE Buyout Deals Buyout PE of # 20%
10%
0% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Q1 2019 United Kingdom France Germany Netherlands Spain Italy Sweden Finland Denmark Other
10 PE Buyout Dealmaking: Deal Volumes by Investor Location Foreign investors participated in just 16% of all European PE buyout deals in Q1 2019, while European funds participated in 88%. This is returning to earlier highs following lows of 83% in both 2014 and 2017.
100%
90%
80%
70%
60%
50%
40% % Rounds of % 30%
20%
10%
0% 2014 2015 2016 2017 2018 Q1 2019 Rounds Including European Investors Rounds Including Foreign Investors
11 European PE Buyout Investment by Sector, First Quarter 2019 Companies within the Computer Software sector comprised 17% of all rounds recorded during the period, making it the most active sector. Industrial & Energy companies captured the largest share of round values with €3.3 billion, or 24%.
First Quarter 2019 Total # of Rounds First Quarter 2019 Total Round Values (€ Billions) 60 € 3.5
50 € 3.0
€ 2.5 40
€ 2.0 30 € 1.5 20 € 1.0
10 € 0.5
0 € 0.0
Computer Software Consumer Related Internet Specific Industrial/Energy Business Services Medical/Health
Financial Services Transportation Manufacturing Communications Other
12 PE Buyout Dealmaking Versus All M&A of European Targets While European buyout deal volumes were up 53% year-over-year, European M&A deal volumes declined by 18% in Q1, resulting in PE deals’ share of traditional M&A climbing to 10%, a level not seen since 2013.
400 12%
350 10%
300
8% 250
200 6%
# of Rounds of # 150 4%
100
2% 50
0 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 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 # of PE Rounds PE Rounds as % of all M&A Activity
13 Top PE Investments by European Firms in Non-European Companies First Quarter 2019
Portfolio Company European Investors
Round Value Rank Company Name Location Sector Investing Firms (Disclosed) (€ Millions) Praxair & Linde AG – U.S. 1 €3,146.7 Danbury, CT Industrial Gas CVC Capital Partners, Messer Group Industrial Gas Assets Business
2 Tallgrass Energy €2,934.1 Leawood, KS Energy Infrastructure Enagás
3 ConvergeOne €1,579.9 Eagan, MN IT Services CVC Capital Partners
4 Delhivery €401.9 Gurgaon, India Supply Chain Services SoftBank Vision Fund
5 Cielo €340.0 Brookfield, WI Talent Acquisition Permira Advisers
€ 25
€ 20
€ 15 Values Values
€ 10 Billions)
€ 5
€
Round Round ( € 0
PE PE Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
14 PE Buyout Fundraising by European Firms A total of 16 European buyout funds raised €9.6 billion in Q1 2019. Top fundraisings included the final close of Astorg VII at its hard cap of €4.0 billion, and The Carlyle Group’s €1.4 billion close of it’s fourth European Technology Partners Fund, CETP IV.
€ 30
€ 26.0
€ 25 € 22.9
€ 20.8 Billions)
€ 20 € € 17.7
€ 15.1 € 15 € 12.7 € 11.8 € 11.3 € 11.2
€ 10 € 9.6 Funds Raised ( Raised Funds
€ 6.7 € 6.0 € 6.2 € 5.2 € 5 € 4.1 € 3.2 € 1.9
€ 0 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19
15 European PE Backed Exits, First Quarter 2019 Europe saw 67 completed exits from PE-backed companies in Q1 2019, up 12% from Q1 2018 volumes but down 40% from Q1 2017 volumes.
Portfolio Company
Round Value Rank Company Name Location Sector Exiting Investors (Disclosed) (€ Millions)
1 Neovia €1,549.8 Vannes, France Animal Nutrition Eurazeo, SODICA, Unigrains
Alternative Investments 2 eFront €1,149.1 Paris, France Bridgepoint Software
3 AHT Cooling Systems €882.1 Rottenmann, Austria Cooling Systems Bridgepoint
Saint Petersburg, TPG Group, European Bank for Reconstruction and 4 Lenta €532.6 Food Retailer Russia Development 140 120
100 80 60
# of Exits of # 40 20 0 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 M&A Secondary Sale Public Exit
16 Cambridge Associates: Buyout Fund Performance European private independent funds continue to show strong performance against the public markets and equivalent returns relative to buyout funds based in the U.S.
14% 14% 13.3% 13.4%
12% 12%
10% 10%
8% 8%
6% 6%
4% 4%
2% 2%
0% 0% Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4 2018 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q4 2018 European Buyout Funds mPME: MSCI Europe Index U.S. Buyout Funds mPME: S&P 500 Index
Source: Cambridge Associates 17 Explanatory Notes
1. Data collected and analyzed by Refinitiv for this statistical report were drawn from a variety of sources including Refinitiv M&A databases, regulatory filings, press releases, and proprietary reports from European and non-resident buyout firms, private equity firms, law firms, and other service providers.
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 Refinitiv.
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 Refinitiv Eikon. Returns are for European and U.S. buyout funds with vintage years of 2000 or greater, on a first cash flow basis, in Euros, from inception to the end of the indicated quarter, under preliminary data mode Q4 2018. 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. Rounds are tracked based on investment headquarter location. 6. All current and previous years data is as of Tuesday, May 7th, 2019. Data is continuously updated and is therefore subject to change. All figures are in Euros unless otherwise noted.
For further information on Refinitiv’s venture capital and private equity offerings, please visit us at:
https://www.refinitiv.com/en/products/eikon-trading-software/private-equity-data/
For further reports on private equity, venture capital, and other asset classes, please visit us at:
https://www.refinitiv.com/en/products/deals-intelligence
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 private equity criteria, please contact us at:
Greg Beaman E-mail: [email protected] Tel: 416-687-7510
18