Buyout market resilient despite rise of IPOs
DESPITE the recent spate of public markets deals, the North West buyout market has proved to be resilient, according to industry data.
The figures from the Centre for Management Buyout Research (CMBOR), sponsored by Equistone Partners Europe and EY, shows that the region continues to be one of the UK’s strongest in terms of deal volume, seeing 15 transactions across the North West with a total value of £783.1m.
Activity during the first quarter of the year was particularly strong with significant deals including the sale of Skelmersdale-based footwear chain Hotter Shoes by Gresham Private Equity to Electra and Stobart Group selling a major chunk of its business.
In the second quarter of 2014, Hg Capital sold Manchester-based fashion business Americana International to German investor Emeram Capital Partners. Also, KCP made a successful exit from Manchester furniture manufacturer Neville Johnson to Alcuin Capital Partners for around £22m.
The data confirms that London is the strongest performing region seeing 20 deals (worth £2.88bn) in the first half of 2014.
During the corresponding period last year (H1 2014) the value of deals in the North West was considerably higher at £1.33bn across 18 transactions.
However, this figure was skewed by the partial sale of Speke-based discount retailer B&M Bargains to US private equity firm Clayton, Dubilier & Rice for £965m and there has also been a spike in recent IPO’s such as Boohoo, AO.com and B&M
Steve O’Hare, Manchester-based partner at Equistone said: “Once again, the latest figures demonstrate the consistency of the North West’s buyout market. While the first half of 2014 was not as active as last year, firms are looking at the next six months with a renewed sense of optimism. The consensus is that pipelines are extremely healthy and we expect activity to pick up considerably over the next two quarters.
“It is also encouraging to see that funding from the debt market remains accessible in a number of forms to businesses in the lower end of the middle-market, as well as for larger transactions. This is evident in the number of refinancings that have successfully gone ahead in the first six months of 2014.”
Tim Morris, corporate finance partner at EY in the North West, said: “Three of the top four largest exits in the UK in Q2 2014 – B&M Retail, Card Factory and Polypipe – were all Northern businesses that listed on the public markets.
“While this highlights the strength of opportunity for private equity investors backing companies in the north, it also illustrates that the attractive IPO market is likely to continue to diminish the pool of northern secondary buyout opportunities, which have traditionally helped to replenish the regional deals markets.”
