UK – Private equity investment appears to be weathering the stormy markets with the management buy-out sector recording its third highest quarterly level, according to figures from KPMG Corporate Finance.
Despite a drop in the number of completed transactions, volume is in line with the first quarters of previous years, says KPMG, with the figure at £5.5bn (e8.9bn) so far this year.

Charles Milner, UK head of private equity at KPMG Corporate Finance, comments: “Our research indicates that the larger end of the buy-out market is still healthy. The private equity marketplace is certainly very active and there is no reason to suppose that the volume of transactions will not pick up again. The question is by how much and how quickly.”

In the first quarter of this year, 34 deals were completed, of which six represented over £500m.
The£5.5bn total for the first quarter 2001 beats the previous quarter by over 30%, says KPMG.
The average value of a single deal was £162m, which was only exceeded by the second quarter of the 2000, but is 25% more than on average for the whole of 2000.

“There have been reports of a slowdown in the levels of fundraising but this is not preventing the private equity houses with quality track records from securing the funds needed. The increasing level of funds raised is feeding the higher average values – the larger funds have increasing firepower. We expect this trend of higher average deal values to continue,” adds Milner.

Included in the 34 buy-outs are nine public-to-private transactions (PTP) amounting to more than £2bn. Four were in the property sector and comprised 80% of the total - £1.6bn.
A further six PTP transactions worth £1.2bn were announced in the quarter but await completion.

“The PTP market continues to represent a significant proportion of the value of larger buy-outs and is one of the key areas of focus for private equity investment,” Milner concludes.