Member Article

North West is leading on private equity buyouts

Steve O’Hare, head of Equistone Partners in the North.

The North West accounted for 21% of all UK private equity buyouts during the first six months of 2012.

According to data published by the Centre for Management Buyout Research (CMBOR), sponsored by Equistone Partners Europe and Ernst & Young, the North West was the leading region for buyouts during H1.

Only London at £2.6bn recorded a higher deal value than the North West’s £1.9bn; a figure swelled by the buyout of supermarket chain Iceland.

The Iceland deal accounted for £1.5bn out of the 12 deals worth £1.9bn in the region during H1. That figure is a 103% increase in value on the 13 deals worth a total of £938m, completed during the first two quarters of 2011.

Q2 of 2012 was slower for the region, with five deals completed totally £270m, in line with the £247m from four deals in the same quarter last year.

Steve O’Hare, head of Equistone Partners in the North, said: “The North West private equity market was robust during the first half of the year, although the figures were swelled by the large Iceland deal.

“Whilst economic conditions remain weak, good quality management teams and business can still see growth and attract funding.

“If economic uncertainties, particularly the Eurozone crisis, become more stable in the second half of the year, then we would expect to see an uplift in the deals completed.”

Nationally, the UK private equity market proved resilient in the first half of 2012, totalling £8bn buyouts and representing a 38% increase on the second half of 2011 (£5.8bn) and 60% of the full-year 2011 value (£12.7bn).

Thirteen of the 103 buyouts so far this year in the UK have been from insolvency, compared with 16 in the whole of 2011.

Meanwhile, the retail sector was buoyant, accounting for £2bn of deals in H1 of 2012, higher than the £1.3bn achieved in the whole of last year.

The data also revealed a slowdown in private equity activity during the second quarter of 2012. In Q1, there were 66 deals totalling £5.4bn compared with 37 deals worth £2.6bn in Q2.

One of the key deals in the first half of 2012 for Equistone was the £140m deal where the firm bought a significant stake in leading provider of recruitment solutions Fircroft Engineering Services Ltd.

Mark Clephan, M&A director at Ernst & Young, said: “It is encouraging to see a rise in buyout values in the North West, but we should remain cautiously optimistic.

“Although activity is showing signs of improvement on last year, it is all relative, and there is still a lack of quality assets coming to market.

“Many businesses are performing well, but we need a period of stability in the UK and Eurozone, to give the quality businesses in the region the confidence to transact.”

This was posted in Bdaily's Members' News section by Tom Keighley .