Yorkshire strides ahead with highest value of PE deals in UK outside London
YORKSHIRE had the highest value of private equity deals in the UK outside London in the third quarter of the year, according to data released today.
The sale of North Yorkshire-based R&R Ice Cream to PAI Partners for £716m was the second largest buyout in the UK in quarter three, according to The Centre for Management Buyout Research (CMBOR), sponsored by EY and Equistone Partners Europe.
The deal was listed behind the recent sale of Vue Entertainment to OMERS Private Equity and Alberta Investment Management Corporation (AIMCo) for £935m.
So far in 2013, the private equity buyout market in Yorkshire has completed £1.8bn worth of deals – second only to London (£3.4bn) – compared to £0.3bn in 2012 and again £0.3bn in 2011 over the same period.
By deal volume, Yorkshire ranked fifth completing 11 deals between January and September 2013 – behind London (25), North West (25), South East (22), and Scotland (13).
PE deals completed in Yorkshire and London amounted to almost half of the UK’s total buyout value of £10.5bn in the nine months to the end of September.
M&A director Mark Clephan at EY said: “Yorkshire’s deals market has no doubt been buoyed by standout buyouts, including the sale of R&R to PAI Partners, Ghd to Lion Capital, and Principal Hayley to US-based Starwood Fund. All have boosted confidence and driven activity in the region, which has the potential to continue.”
Steve O’Hare, partner at Equistone Partners Europe in the North of England, said: “Confidence has returned to the Yorkshire market – the volume of big ticket deals in the region during the past year is testament to the appetite for growth. It’s positive that management teams are looking to private equity to achieve growth ambitions.”
So far this year, 133 deals worth £10.5bn were completed in the UK, representing a slowdown when compared to the same period in previous years – 141 in 2011 (£10.1bn) and 156 (£12bn) in 2012.
By value, there have been no deals recorded over £1bn in 2013, compared to three that closed between January and September 2012.
Sachin Date, private equity leader for Europe, Middle East, India and Africa (EMEIA) at EY, said: “This low level of mega-deal activity in the UK is somewhat of a conundrum – the capital and debt markets are healthy and the UK has access to some of the best leveraged finance in Europe, which should result in more deal activity at this level.
“In contrast, the European deals market has seen mega deals take centre stage with the top five deals in the last quarter accounting for over half the total combined deal value of €10bn.
“With strong competition for assets from corporate buyers, PE houses may be finding themselves unable to compete for these high-value assets. The recent Lucozade Ribena deal is a clear example where a strategic corporate buyer was successful despite strong interest from PE.”
Mark Clephan concluded: “Whilst deal processes are taking longer, Yorkshire is proving resilient in its ability to complete deals of all sizes, right up to the £1bn mark. We expect corporate carve-outs to add to a good pipeline of PE backed and entrepreneurial transactions.”
