Quarterly UK buyout value highest since Lehman crash
Average deal size increased sharply in Q1 2010 to £116.7m from £39.5m in 2009. This was due predominantly to a number of large secondary buyouts including KKR's acquisition of Pets at Home and Apax's buyout of Marken.
There were two buyouts over £500m in Q1 2010 (Pets at Home and Marken) – compared to two in the whole of 2009 - which accounted for 40% (£1.9bn) of the overall value of buyouts in the quarter. There were 10 buyouts in the upper-mid market range (£100m- £500m) in the quarter totaling £2.5bn, comprising half of the overall value of buyouts in the period.
By overall value, buyouts in the lower mid-market (£10m to £100m) more than tripled to £493m in Q1 2010 from £159m in Q4 2009. The value of smaller buyouts (less than £10m), however, only accounted for 0.8% of the overall value.
Christiian Marriott, a Director of Barclays Private Equity, commented: "It is encouraging to see a healthy recovery in the UK buyout market at the start of the year, in particular, a return of secondary buyouts and larger deals. This undoubtedly signals a renewed appetite amongst private equity firms to invest, driven by improved lending by the banks for new deals and clearer earnings visibility.
"We have historically seen an increase in the volume of secondary, and tertiary, transactions when there the economy has been more buoyant in 2006/7. Private equity firms have significant amounts of capital to deploy and it would be no surprise if we continue to see an active secondary and tertiary market.
"The strong start to the year, however, may not necessarily signal a sustained resurgence in the UK buyout market, rather a more gradual recovery over the next few years as confidence returns to the market."
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