Clearwater International anticipates increased activity levels from North American private equity portfolio companies investing in Europe

Recent research conducted by Clearwater International has revealed that the total number of private equity deals in 2017 was up 29% on 2016, with the majority of the transactions completing in the last three quarters of the year. The 2017 Heatmap Annual Review, in association with unquote”, shows this was driven by significant increases in activity in Benelux (up 52%), UK / Eire (up 41%) and France (up 34%) with small increases in deal volumes seen in other European territories.

Clearwater International was also pleased to disclose an increase in its work with private equity funds – completing 52 deals involving a private equity acquirer or vendor, with a total deal value of €5.1bn (up over 20%). Transactions were completed with over 30 different private equity funds, across 13 different countries.

The Heatmap Research shows significant uplift in activity in the industrials and chemicals and TMT sectors, which together accounted for c.44% of deal volumes across Europe, also revealing a slight increase in average multiples to 10.4x (up from 10.2x in 2016). This increase is being driven by rising valuations in the Nordic and DACH regions.

Clearwater International has also continued to track domestic versus cross-border private equity activity, and on North American-based private equity funds investing in Europe. During 2017, as expected the majority of deals by private equity funds across Europe were domestic (c.62%) in line with 2016. Whilst levels of activity from US sponsors looking at new platforms in Europe is also similar to that of 2016, there has been a c.15% increase in acquisitions by their portfolio companies, a trend which we expect to continue into this year. Business Services, Industrials & Chemicals and TMT represented 70% of their portfolio company M&A activity and over 60% of new platform investments. The UK / Eire region continued to be the most attractive geography for North American sponsors or for their portfolio companies to invest in, accounting for c.50% of deals.

At Clearwater International, we saw similar trends with 70% our private equity transactions being domestic. Consumer and TMT were our most active sectors with 14 deals each of the 52 completed transacitons, and the UK and Eire region accounting for over half of our private equity transactions. We also saw increases in the deal volumes in Nordics with the region completing almost 20% of our private equity transactions.

Across Europe, our work with private equity funds was well balanced with 11 of our transactions advising private equity funds on exiting a portfolio company, 11 transactions supporting either the private equity fund or management on an acquisition and 11 refinances of private equity portfolio companies.

At Clearwater International, we are seeing continued high levels of private equity activity in all regions and anticipate increased activity levels from North American private equity funds – particularly through their portfolio companies – in 2018.