Record first half for UK buyouts

The intense pressure and exposure afforded the UK private equity this year – with regular Treasury grillings and angry letters from union heads in the national papers – has not affected the industry’s ability to complete on deals. The UK buyout market has already recorded more than £25bn (US$50.55bn) of buyouts in the first half of 2007, close to the full year 2006 figure of £26.5bn.

The figures were released by the Centre for Management Buyout Research (CMBOR), situated at Nottingham University and founded by Barclays Private Equity and Deloitte, which said that the final total for 2007 could reach a staggering £40bn. Given that Carlyle is reportedly considering a US$22bn play for Virgin Media, that figure could be well within reach.

Although the total for H1 2007 was significantly skewed by the Kohlberg Kravis Roberts and Stefano Pessina £11.1bn buyout of Alliance Boots, first-half buyouts excluding that deal still reached £13.9bn, up 31% on the first half of 2006.

“The Alliance Boots deal is a landmark event as it is the first buyout of a FTSE 100 company,” said Tom Lamb, co-head of Barclays Private Equity. “It remains to be seen whether the Alliance Boots deal will open the floodgates for more FTSE 100 buyouts. The firepower is certainly there with fundraising remaining at record levels.”

CMBOR said that, although Alliance Boots is the largest European buyout ever and is 50% bigger than the next largest European deal (TDC, the Danish telecom business, which was valued at €13bn in 2006), it is only the fifth largest buyout of all time on a global basis.

Activity in the retail sector made the greatest impact, jumping from £3.3bn in H1 2006 to £12.bn in the first six months of this year, with secondary buyouts such as Fat Face, Threshers, Jimmy Choo and Phase Eight a predominant theme.

Buyout chiefs may have been sweating in the spotlight lately, but their partners have been out in the high street snapping up assets at a record pace.