European Private Equity Activity Increases in Q218

European Private Equity Activity Increases in Q218

Pitchbook has a new report out about private equity activity in Europe. It indicates that, despite a slow start to the year, PE deal activity picked up notably in the second quarter. Across the continent there were 804 deals 2Q with a total valuation of  €88.5 billion.

Deals above the  €1 billion  threshold? There were only seven such deals in the first quarter; there were 13 in the second. One of these large deals was a  €4.6 billion investment for a 57.8% stake in AccorInvest. That implies a valuation of AccorInvest at  €8.0 billion, and makes this the largest buyout in the business-to-consumer space since 2013.

The median deal value plateaued in recent years. There were also 219 exits in 2Q .More than half (51%) of these exits were secondary buyouts (SBOs). The IPO market remains lukewarm in Europe. Only 17 companies went public 2Q.

Sectors and Regions

Taken as a whole, the first half of 2018 puts the European PE market on pace for another solid year, the analysis says, akin to 2015 and 2017, which in terms of total deal value were the two best years for the PE market since the global financial crisis.

Looking at specific sectors: information technology has increased its share of both the deal count and deal value. IT has accounted for 21% of all PE deals in the first half of this year, and 24% of so-called “bolt-on” acquisitions (that is, all acquisitions in which a PE firm, already in possession of company A, acquires company B specifically to increase the value of A.)

Chopping the numbers by geography: the U.K. and Ireland’s proportion of deal flow has shrunk, while that of France and Benelux has grown. Just after the Brexit vote in 2016, there was a consensus “business as usual” view in the U.K. But two years in, with as the report puts it “the exit date quickly approaching and high-level government officials stepping down due to a lack of cohesive vision,” that consensus has not held. But the region on the western side of the channel still has a lot going for it, including “deep capital markets and a talent pool,” so it is not to be counted out in the second half.

The France and Benelux region has reached 29% of Europe’s PE deal flow, its highest percentage since 2010. Accordingly, the report includes a “spotlight” section of the France & Benelux region.  This particular region saw three deals with a valuation of above  €2.5 billion close in the first half. Median deal size for this region has witnessed a significant uptick over 2017 because of the closing of mega-deals.


The Pitchbook analysis, looking at exits, observes that throughout the first half of this year, SBOs in Europe were larger than the number of corporate acquisitions. The reverse is the case in the United States.

At the top end, the European PE industry scored 12 SBOs over €1 billion in the first half, putting it on pace, even if the back-end of the year turns out slow, to do better than the 17 such deals in all of last year (or the eight in 2016).

In its final section, the Pitchbook report discusses PE fundraising, which slowed in Europe even as deal activity was picking up.  The first quarter actually set a new fundraising record, so the decline in fundraising in 2Q may be considered a matter of reversion to the mean. Further, it may come to seem the brief hiatus before a busy second half, since “there are currently five open buyout funds aiming to raise above €3 billion.”

The U.K. and Ireland region has seen a slowdown in funding vis-a-vis last year, though here too Pitchbook is optimistic that the numbers “may creep up” in the second half.

Fundraising in the Nordic region has been especially robust. EQT, for example, a Sweden-based PE concern that does a lot of infrastructure investing, recently held a final close on its EQT VIII buyout fund. Likewise, Nordic Capital held the final close on its Nordic Capital Fund IX.

A Thought on Fund Size

The report also finds that size matters for fundraising. The funds with more than €500 million account for a growing proportion of the capital raised. That proportion has increased every year since 2014.

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