SCM Strategic Capital Management has predicted a record year for fund raising in 2005 with funds such as BC Partners, Bridgepoint, Candover, Cinven, CVC, Electra, HgCapital and Montagu all in fund raising mode.
SCM also predicts the five largest funds, which will start fund raising this year will have an aggregate target fund size of over €20bn. In addition, US firms such as KKR will be launching European funds that will compete for investor’s allocations in the large buyout segment.
The research looks at the large European buyout and secondary buyout market with transaction values from €400m and above. The study highlights deal statistics by country, deal segments and fund managers and looks at buyouts and secondary buyout deals that have been completed between 2002 and 2004.
Looking at deal flow by country with 35.2% of all large buyout deals across Europe, the UK/Ireland remains the most important market. By market value UK/Ireland counts for 38.5% of all transactions. Germany and France are gaining market share and both count for around 20% in volume and value of deals.
The research also reveals there is no steady deal flow to rely on in Scandinavia, Spain and Switzerland. And no clear trend is seen in Italy where 2004 failed to continue the trend of increasing deal flow seen in previous years.
The study also looked at US managers in Europe where the overall market share of US GPs in European buyout transactions was 24.6% by number of deals (37.7% including syndicated deals) and 26% by value of deals (45% including syndicated deals) between 2002 and 2004. In Germany, where more than 50% of all transactions have been led or syndicated by US firms, these firms clearly exceeded the European average. In the UK and Ireland, however, US GPs have failed to make the same impact as they have in continental Europe.
And the increase in secondary buyouts accounted for 32.6% of all transactions in 2004, up from 13.1% in 2002. US private equity firms have again been active in this space with an average market share of almost 22%.