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I N P A R T N E R S H I P W I T H
EUROPEAN
1Q 20 16
PE ACTIVITY DROPS SIGNIFICANTLYPAGE 5»
E XI T AC T IV I T YPAGE 9»
1Q 20 16L E AGUE TABL E S
PAGE 11»
SPOTLIGHT: NORDICSPAGE 7»
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Credits & ContactPitchBook Data, Inc.
JOHN GABBERT Founder, CEO
ADLEY BOWDEN Vice President,
Market Development & Analysis
ContentGARRETT BLACK Senior Analyst
BRIAN LEE Data Analyst
JENNIFER SAM Senior Graphic Designer
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RESEARCH
EDITORIAL
SALES
COPYRIGHT © 2016 by PitchBook Data, Inc. All rights reserved. No part of this publication may be reproduced in any form or by any means—graphic, electronic, or mechanical, including photocopying, recording, taping, and information storage and retrieval systems—without the express written permission of PitchBook Data, Inc. Contents are based on information from sources believed to be reliable, but accuracy and completeness cannot be guaranteed. Nothing herein should be construed as any past, current or future recommendation to buy or sell any security or an offer to sell, or a solicitation of an offer to buy any security. This material does not purport to contain all of the information that a prospective investor may wish to consider and is not to be relied upon as such or used in substitution for the exercise of independent judgment.
Introduction 4
Overview 5
Deals by Sector and Size 6
Spotlight: Nordics 7-8
Exits 9
Fundraising 10
1Q 2016 League Tables 11
Contents
Sample photograph in Nordics section courtesy of Erik A. Drabløs, Wikimedia Commons.
3 PITCHBOOK 1Q 2016 EUROPEAN PE BREAKDOWN
SPONSORED BY
An increasingly complex investment sceneIntroduction
In the last edition of this report, released in January—devoted solely to
analyzing European private equity activity in terms of leveraged buyouts,
growth, recapitalizations and more—we stated that the European investment
scene was only growing more complex. Since then, that complexity has
scarcely abated. If anything, it has only intensified. Setting aside the effects
of ongoing political concerns centered on the refugee crisis or terrorism,
there remain more than enough variables for investors to consider. The
specter of Brexit and its accompanying regulatory and currency risks are
certainly depressing PE investment prospects in the United Kingdom &
Ireland, Europe's most active PE market. Norway's offshore operations are
still suffering. Germany's exports may have recently strengthened, but such
strength will need to be sustained to translate into investor-encouraging
growth forecasts. The European Central Bank's continued quantitative easing
seem to exhibit diminishing returns, with inflation remaining stubbornly low.
In fact, current monetary policies are exerting pressure on banks' profitability,
even as some still grapple with the aftereffects of the financial crisis, as
evidenced by Italy's new state-sponsored fund looking to take on the burden
of bundles of bad loans.
All in all, there are plenty of pessimistic or uncertain indicators to give pause.
But as in any complex environment, pockets of promise remain. Banks are
still deleveraging in the post-Basel III era, leading the way for alternate,
direct lenders to step in. Firms with strong track records in particular
niches or the resources to develop robust investment theses for operational
enhancements—the most important lever for value creation in the current
environment—will still be able to close deals. In short, there remain incentives
and opportunities to deploy the ample amounts of capital hoarded in PE
coffers currently; they will simply remain more difficult to navigate than they
were in the preceding years.
GARRETT JAMES BLACK
Senior Analyst
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4 PITCHBOOK 1Q 2016 EUROPEAN PE BREAKDOWN
SPONSORED BY
A slow startOverview
European PE activityEuropean PE deal flow fell by a
considerable amount in the first
quarter of 2016. Even if these figures
are revised up by a small margin as
more data trickles in, the volume of
deal flow slid by 21.7% relative to 4Q
2015, while overall value plunged
by a staggering 40.8%. It's clear
the unfortunate circumstances the
continent faced to start 2016 were
more than enough to dissuade PE
investors from maintaining the pace
seen throughout 2014 and 2015.
Not even the overabundance of dry
powder, nor the growing acceptance
and usage of direct lending—which
makes sense in light of banks'
ongoing troubles—could help soften
the impact of growing investor risk
aversion. In short, a return to the
levels of investment seen in 2012
and 2013 seems likeliest, as PE firms
still grapple with relatively higher
valuations and tougher growth
prospects. Opportunities still exist
for shrewd investors to deploy
capital, of course, it's simply that
disparities still exist between buyers
and sellers, with owners of top-tier
assets all too aware of their privileged
position. Competition from strategic
buyers mustn't be discounted as
well. Meanwhile, the loan market
will continue to be transformed by
the emergence of direct lending
as a palatable alternative to banks'
dominance, encouraging PE funds to
begin making inroads into becoming
private debt providers to European
mid-market enterprises. In short, the
European investment scene is only
growing more complex to navigate,
which will lead to deal flow either
sliding lower in future or at least
plateauing to a subdued rate.
€267
€315
€208
€98
€192
€223
€207
€252
€326
€394
€60
1,638
2,104 1,975
1,453
2,062
2,395
2,252 2,269
2,557 2,673
519
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Deal value (€B) # of deals closed
Source: PitchBook
*As of 3/31/2016
20.7%18.5%
0%
5%
10%
15%
20%
25%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Percentage of European PE activity with U.S.-based investor participation
Source: PitchBook
*As of 3/31/2016
European PE activity
€56
€57
€72
€67
€69
€82
€91
€83
€97
€99
€97
€101
€60
567593
539 570
658 663 642
594
705643 662 663
519
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q
2013 2014 2015 2016Deal value (€B) # of deals closed
Source: PitchBook
5 PITCHBOOK 1Q 2016 EUROPEAN PE BREAKDOWN
SPONSORED BY
Amid a slump, it's interesting
to note that a flight to quality
has resulted in the lower and upper
middle ends of the market—in
terms of deal size—proving the
In terms of overall deal value, B2B is resilient
European PE deals (¤B) by sector
B2B retains an outsized proportion
European PE deals (#) by sector
The upper reaches of the middle market have seen a
plurality of transactional value thus far
European PE deals (¤B) by size
In the downturn, the flow of smaller deals is
unsurprisingly less affected
European PE deals (#) by size
Growing disparity in the market as risk aversion risesDeals by sector & size
most resilient. Unsurprisingly, the
smallest size range has accounted
for the most deals thus far, with the
attraction of bolt-ons helping prop
up the flow of investments. At the
same time, PE investors are still
cutting deals with fairly hefty price
tags, exhibiting a willingness to pay
up when justifiable. Deals like the
acquisition of Saverglass by The
Carlyle Group or EQT's investment
in Piab, however hefty, will still
close given not only the caliber and
resources of the buyer but also the
nature of the target company. It's
probable that as European activity
remains subdued there will be further
concentration of buyouts at the
lower end of the market, as well as
a consistent trickle of higher-valued
deals when buyers find reason to
spend considerably. The spate of
¤2.5 billion+ deals seen in the past
couple years is unlikely, barring some
considerable divestitures.
0
500
1,000
1,500
2,000
2,500
3,000
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*
€2.5B+ €1B-€2.5B €500M-€1B
€100M-€500M €25M-€100M Under €25M
Source: PitchBook
*As of 3/31/2016
Source: PitchBook
*As of 3/31/2016
€0
€50
€100
€150
€200
€250
€300
€350
€400
€450
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*
€2.5B+ €1B-€2.5B €500M-€1B
€100M-€500M €25M-€100M Under €25M
€0
€50
€100
€150
€200
€250
€300
€350
€400
€450
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*
B2B B2C
Energy Financial Services
Healthcare IT
Materials & Resources
0
500
1,000
1,500
2,000
2,500
3,000
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*
B2B B2C Energy
Financial Services Healthcare IT
Materials & Resources
Source: PitchBook
*As of 3/31/2016
Source: PitchBook
*As of 3/31/20166
PITCHBOOK 1Q 2016 EUROPEAN PE BREAKDOWN
SPONSORED BY
PE investment in the Nordic region is set to be lower than 2013 levels
Nordic PE deals
Spotlight: NordicsOverview of PE activity in the Nordic region
At 58 closed investments for
an aggregate of ¤7.4 billion in
value, Nordic PE deal flow is down
from the past several quarters. The
ongoing rout in Norway's high-yield
debt market given persistently low oil
prices is a troubled patch amid wider
unease, helping exacerbate general
turbulence, although it's worth noting
there is some degree of currency
shielding. Meanwhile, relatively higher
valuations and ample dry powder are
still driving elevated rates of bolt-ons,
as PE firms seek to source among
the lower end of private market
companies. Continued interest
from U.S. PE firms—with 74.1% of
deals thus far in 2016 garnering U.S.
participation—has doubtless helped
soften the downturn in activity thus
far in the year, although subdued
investment going forward is likely.
€30
€35
€18
€10
€22
€28
€27
€31
€41
€44
€7
226
286
231
187
270293 292
263
308330
58
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Deal value (€B) Deal count
Source: PitchBook
*As of 3/31/2016
Although traditional LBOs remain common
Nordic bolt-ons (#) relative to total buyouts
Higher valuations are still encouraging bolt-ons
Nordic PE activity (#) by deal type
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*
Buyout Bolt-on PE Growth Platform CreationSource: PitchBook
*As of 3/31/2016
43
69 53 70
104 12
3
115
109 14
7 173
27
131
150
121
77
117
132
130
115
134 12
4
30
25%
32%
30%
48% 47% 48% 47%49%
52%
58%
47%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Bolt-On Non Bolt-On Bolt-On % of Buyouts
Source: PitchBook
*As of 3/31/2016
7 PITCHBOOK 1Q 2016 EUROPEAN PE BREAKDOWN
Nordic PE deals (¤B) by sector
Nordic PE deals (¤B) by size
Nordic PE deals (#) by sector
Nordic PE deals (#) by size
Nordic PE activity with U.S. involvement Nordic PE-backed exits
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*
€2.5B+
€1B-€2.5B
€500M-€1B
€100M-€500M
€25M-€100M
Under €25M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*
€2.5B+
€1B-€2.5B
€500M-€1B
€100M-€500M
€25M-€100M
Under €25M
Source: PitchBook
*As of 3/31/2016
Source: PitchBook
*As of 3/31/2016
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*
B2B
B2C
Energy
FinancialServices
Healthcare
IT
Materials &Resources
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%20
06
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*
B2B
B2C
Energy
FinancialServices
Healthcare
IT
Materials &Resources
Source: PitchBook
*As of 3/31/2016
Source: PitchBook
*As of 3/31/2016
€16
€14
€6 €9 €11
€7 €9 €14
€14
€2
75
100
53
61
77
9594
127
111
149
22
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Exit value (€B) # of exits
46.9% 47.2%
61.9%
42.8% 42.2%
51.5%
64.0%
71.9%81.5%
72.7%
74.1%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
% of deals with U.S.-based investor participation
Source: PitchBook
*As of 3/31/2016
Source: PitchBook
*As of 3/31/2016
8 PITCHBOOK 1Q 2016 EUROPEAN PE BREAKDOWN
SPONSORED BY
Down, yet likely not outExits
In the wake of a blockbuster
2015, European PE-backed exits
were almost bound to underwhelm, if
only due to timing. Even accounting
for the impact of seasonality, exits
haven't been this low in volume
and value since the same period
two years ago. The effects of
volatility as well as macro concerns
were certainly felt, with corporate
acquirers in particular dialing back
their pace. However, with the overall
environment favoring stock buybacks
and acquisitions, M&A of PE-backed
holdings could pick up once more,
particularly if Chinese multinationals
look to Eurozone businesses for
purposes of becoming globally
competitive. As for sponsor-to-
sponsor transactions, at this point,
questions of quality become ever
more paramount.
Will 2016 recover to see levels approaching those seen in 2013-2015?
European PE-backed exits
It's difficult to see how the total value of SBOs could
match last year's haul
European PE-backed exits (¤B) by type
Thus far in 2016, the historical proportion of M&A to
SBOs has been preserved
European PE-backed exits (#) by type
€120
€124
€80
€28
€60
€102
€73
€186
€149
€184
€34
604
754
531411
615
806
715
901 906
1,074
203
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Exit value (€B) # of exits
Source: PitchBook
*As of 3/31/2016
0
200
400
600
800
1,000
1,200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Corporate Acquisition IPO Secondary Buyout
Source: PitchBook
*As of 3/31/2016
€0
€20
€40
€60
€80
€100
€120
€140
€160
€180
€200
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Corporate Acquisition
IPO
Secondary Buyout
Source: PitchBook
*As of 3/31/2016
9 PITCHBOOK 1Q 2016 EUROPEAN PE BREAKDOWN
SPONSORED BY
Trending toward a plateau?Fundraising
European PE fundraising
figures are still suggestive of
considerable selectivity across the
fundraising market. On a quarterly
basis, the 22 vehicles closed in 1Q
2016 for ¤10.2 billion in commitments
isn't much lower than the historical
mean, but paired with the decade
high in median PE fund size of ¤365
million, it's clear successful closes
are increasingly limited to larger,
more experienced fund managers.
Only 12 funds under ¤100 million
have closed in the past five quarters.
Timing had a hand in that median
fund size as well, with notable firms
such as Investindustrial, CVC Capital
Partners and 21 Partners, among
others, closing in 1Q, but the overall
trend remains unmistakable. It's not
that limited partners aren't looking
for exposure to European PE, they're
just growing increasingly selective.
Numbers have stabilized somewhat
over the past several quarters,
so perhaps a plateau of sorts is
emerging.
Since 2010, fund counts and capital raised have diverged somewhat
European PE fundraising
European PE funds (¤B) by size
Only one quarter in, 2016 is continuing the trend of
the bigger the better, observed since 2012
European PE funds (#) by size
Source: PitchBook
*As of 3/31/2016
Source: PitchBook
*As of 3/31/2016
€80
€78
€57
€40
€27
€43
€35
€70
€43
€51
€10
193 190
160
116 112 121106 110
98
74
22
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016*
Capital raised (€B) # of funds closed
Source: PitchBook
*As of 3/31/2016
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*
€5B+
€1B-€5B
€500M-€1B
€250M-€500M
€100M-€250M
Under €100M
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
*
€5B+
€1B-€5B
€500M-€1B
€250M-€500M
€100M-€250M
Under €100M
10 PITCHBOOK 1Q 2016 EUROPEAN PE BREAKDOWN
SPONSORED BY
League tables1Q 2016
Bpifrance 13
Business Growth Fund 12
The Carlyle Group 8
Ardian Private Equity 7
CM-CIC Investissement 7
Crédit Agricole 7
Bridgepoint 6
Eurazeo 6
HgCapital 6
Kohlberg Kravis Roberts 6
MML Capital Partners 6
Siparex Group 6
Inflexion Private Equity 5
Naxicap Partners 5
Palatine Private Equity 5
Sentica Partners 5
Verdane Capital 5
Amundi Private Equity 4
BC Partners 4
Equistone Partners Europe 4
FSN Capital 4
Grand Sud-Ouest Capital 4
HarbourVest Partners 4
Industries & Finances Partenaires 4
Ouest Croissance 4
PAI Partners 4
Most active investors by deal count
KPMG 28
PricewaterhouseCoopers 28
Ernst & Young 25
Rothschild Group 13
Deloitte 12
BNP Paribas 8
DC Advisory Partners 6
The Goldman Sachs Group 6
Fineurop Soditic 5
CIL Management Consultants 5
Bain & Company 4
Credit Suisse 4
Livingstone Partners 4
Grant Thornton 4
Lazard 4
Jamieson Corporate Finance 3
Goetzpartners 3
ING Bank 3
Clairfield International 3
Catalyst Corporate Finance 3
Bishop Fleming 3
BDO 3
Most active advisors by deal count
Jones Day 11
Travers Smith 9
Squire Patton Boggs 8
Clifford Chance 8
Latham & Watkins 8
Allen & Overy 8
Weil, Gotshal & Manges 7
Eversheds International 6
DLA Piper 6
Simmons and Simmons 6
Addleshaw Goddard 6
Willkie Farr & Gallagher 5
Olswang 5
Lamartine Conseil 5
Ashurst 5
CMS Cameron McKenna 4
Shearman & Sterling 4
FIDAL 4
Freshfields Bruckhaus Deringer 4
Gateley 4
Hogan Lovells 4
Freeths 4
CMS Hasche Sigle 4
Most active law firms by deal count
Source: PitchBook
Source: PitchBook
Source: PitchBook
11 PITCHBOOK 1Q 2016 EUROPEAN PE BREAKDOWN
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