UK Private Equity Set For Record Year

by Phillip Morton, Investors Offshore.com

11 July 2007

New statistics have revealed that the UK private equity market has picked up significantly after a slow start to 2007.

Excluding the Alliance Boots mega-deal the first half total was GBP13.9 billion, up 31% on the first half of 2006. Including Alliance Boots, the first half total is already over GBP25 billion, close to the record 2006 full year number of GBP26.5 billion, the figures from CMBOR, a provider of analysis on the UK buy-out market founded by Barclays Private Equity and Deloitte, have showed.

Mark Pacitti, Corporate Finance Partner at Deloitte, revealed that: “After a sluggish start to the year private equity completions have bounced back in Q2 and we may well achieve a record GBP40 billion by the end of 2007.”

Pacitti added: “Notwithstanding continuing concerns over consumer confidence on the high street, we have also seen a number of large scale secondary retail buy-outs this year including Fat Face, Threshers and Jimmy Choo.”

Tom Lamb, Co-Head of Barclays Private Equity, observed: "The Alliance Boots deal is a landmark event, as it is the first buy-out of a FTSE100 company. Interestingly, although it is the largest European buy-out ever and is 50% bigger than the next largest European deal (TDC, the Danish telecom business, which was valued at EUR13bn in 2006), it is only the fifth largest buy-out of all time on a global basis."

"It remains to be seen whether the Alliance Boots deal will open the floodgates for more FTSE100 buy-outs. The firepower is certainly there with fundraising remaining at record levels," Lamb continued.

Total public to private buy-outs in the first six months of 2007 have reached record levels of GBP14 billion compared to nearly GBP6 billion last year, accounting for two thirds of the total market value according to the study, which also revealed that the level of fundraising has continued to be very high and is already at nearly GBP11 billion, over half the record total of GBP20.2 billion set in 2006.

The largest sector so far is retail, which has more than doubled last year’s value of GBP3.3 billion to GBP12.4 billion. There was also a significant number of high street chain stores involved in secondary buy-outs in the first half of 2007 – Fat Face, Threshers, Jimmy Choo and Phase Eight, the report stated.

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