European private equity industry at lowest ebb since 2001

The European buyouts market has sunk to its lowest level for seven years after investment in 2008 reached a total of only €43.9bn, a 60% fall on the previous year.

A total of 1,200 deals were completed in Continental Europe according to the latest report from data house CMBOR, the fewest number since 2001.

The portion of the market least affected by the global downturn was the smaller end of the mid-market. The stats reveal that deals in the €10m to €25m range totalled 92 by number and €1.6bn by value, a slight fall on 2007’s figures of 97 and €1.8bn.

Moving up a range to €25m-€50m and deals have increased from 66 to 69, and by value from €1.4bn to €1.8bn.

It’s at the mega-buyouts end where the pain is really being felt. In 2007, €74.7bn worth of €500m+ deals were completed. In 2008, this figure reached just €16bn.

Christiian Marriott, director at Barclays Private Equity, said: “The lack of debt is clearly taking its toll on the top end of the market with just 19 mega deals completed last year compared to 62 in 2007. This is likely to remain the norm as the year progresses and banks show limited appetite to fund large buy-outs.”

Marriott said: “The situation we have witnessed in the second half of 2008 is likely to be repeated in 2009. Until confidence returns to the market, most buyers and sellers will sit on their hands and wait for clearer signals on any potential recovery. There will be some good deals that find bank funding, but they will be few and far between. For many buy-out houses, 2009 is going to be a year with limited new investment activity.”