Six-year high for private equity-backed buyouts in the East Midlands

The value of private equity-backed deals in the East Midlands was at its highest level for six-years in 2021, according to provisional data from CMBOR, the Centre for Private Equity and MBO Research.

There were 13 deals in the East Midlands in the year with a combined value just shy of £1bn – at £989m, significantly up from the total value of £152m in 2020 and the highest since 2015 (which stood at £1.56bn and was dominated by one major deal).

Whilst the number of deals in the East Midlands was in line with the average for the past ten-years (13), the total value for the year was above the annual average of nearly £708m, according to the data in CMBOR’s first full-year announcement since its re-establishment within Nottingham University Business School with the support of Equistone Partners Europe.

Five deals were recorded in the first quarter of the year, four in the second quarter and two in each of the last two quarters of 2021.

In the neighbouring West Midlands, 16 deals were completed in the year with a combined value of £4.7bn which was in part driven by two landmark deals – Aggreko’s delisting from the London Stock Exchange following its £2.3bn acquisition by private equity firms TDR Capital and I Squared Capital, and Blackstone’s acquisition of warehouse and house builder St Modwen in a deal valued at nearly £1.7bn.

CMBOR’s year-end report also showed that private equity activity across the whole of the UK reached levels not seen since before the global financial crisis. At £45.8bn, the cumulative value of the 235 buyouts of UK-based companies in 2021 represented the biggest headline figure in the 35-year history of CMBOR, surpassed on an inflation-adjusted basis only by the £44.1bn recorded in 2007.

Will Copeland, from Equistone’s Midlands office, said: “With the exception of 2015, the deal value of buyouts in the East Midlands is the highest it has been for over 10 years. The region has built-on the resilience shown in the second half of 2020 and continued to be an attractive region for investment capital.

“Average deal value in the East Midlands rose significantly from £14m in 2020 to £76m in 2021, well above the average for the last ten years of £53m, with sector-focus predominately being in business services and technology companies,” said Copeland.

“For the year ahead, there are several interesting opportunities emerging in the Midlands, both from a platform investment and bolt-on investment perspective. There is some anticipation that the latter may arise from more distressed situations.

“Meanwhile, we will continue to focus not only on finding new investment opportunities but also realising value for our investors. I suspect we’re not the only general partner in this segment that has returned more capital to investors than we invested in 2021,” he said.

Across the UK, record levels of capital deployment were accompanied by strong exit activity, as private equity firms realised 124 investments in the UK at an aggregate value of £27.9bn – the largest such figures since 2018 and 2017, respectively. Floatations were a significant contributor, accounting for the largest single exit (Blackstone and CVC’s relisting of Paysafe via sale to a Special Purpose Acquisition Company) and reaching their highest volume since 2017 and cumulative value since 2015.

These seven UK listings, totalling £11.3bn, showed private equity firms also steering investee companies back towards public markets following a successful hold period.

Dr Kevin Amess, Associate Professor in Industrial Economics at Nottingham University Business School and Fellow of CMBOR, said: “We’ve seen an extremely buoyant UK buyout market in 2021, indicating that the industry has mounted a near full recovery from the impact of Covid.

“What is interesting is how part of that recovery has involved private equity taking an ever-greater role in funding high-growth companies in those sectors such as technology and healthcare that will be the fundamental building blocks of the UK economy post-pandemic.”

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