EMEA Private Equity Market Snapshot - Essential tools for strategic decisions December 2019 Issue 23 - S&P Global
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EMEA Private Equity • Global GPs’ Activity into EMEA Slows as Another Brexit
Extension is Confirmed
Market Snapshot •
•
UK’s “Going Private” Deals Taking Off
PE Investments in European Communication Services Targets
Essential tools for strategic decisions on Course to Reach a Decade High
December 2019│Issue 23 • Feature Article: Private Equity Leveraging ESG to Create ValueEMEA Private Equity Market Snapshot
Editor’s Note Authors
Ilja Rubie Pearl
Welcome to the 23rd issue of the EMEA Private Equity Market Hauerhof Corales
Snapshot (PEMS), a quarterly publication focusing on the Private
Equity (PE) market in Europe, the Middle East and Africa (EMEA) from Senior Manager, Associate,
S&P Global Market Intelligence. Product & Market Product & Market
Development EMEA Development
This issue addresses the overall decline in capital deployed and
number of deals felt across EMEA, in spite of some surprising gains S&P Global Market S&P Global Market
among the Financials and Healthcare sectors. After discussing the Intelligence Intelligence
factors playing into this trend, we take a deeper dive into the number
of PE-backed Public to Private buyout deals on the horizon in the UK.
Ewa Madeleine
From there, we take a broader view of the Communication Services
Skornas Farman
sector and look at the implications of its record-setting upwards
trajectory over the past five years. We close with a feature article Associate, Senior Editor
examining the way investors are increasingly perceiving Investments Data
S&P Global Market
Environmental, Social and Governance as an investment opportunity
S&P Global Market Intelligence
to be seized, as opposed to an investment risk to be managed.
Intelligence
We look forward to receiving feedback and suggestions on regions or
sectors of interest for future analysis. To subscribe or comment on
the complimentary EMEA PEMS, please email
market.intelligence@spglobal.com.
If you would like to read previous issues of this report, please visit
www.spglobal.com/marketintelligence/emea-pems-archive
2EMEA Private Equity Market Snapshot
Global GPs’ Activity into EMEA Slows as Another Brexit also suffered a drop, with both received capital and deal count falling
by 24% year-over-year, from €2.4bn to €1.8bn, and 121 deals to 75
Extension is Confirmed
deals, respectively. Benelux targets experienced the biggest reduction
One month after the end of the third quarter, the European Union (EU) in deployed capital, receiving only €1.7bn in the quarter compared to
and the United Kingdom (UK) have agreed on yet another Brexit €9.7bn in the previous year; though it’s important to note that 75% of
extension, giving the UK until January 31, 2020 to exit the EU. Given the the Q3 2018 value was attributable to a single deal that saw KKR & Co.
uncertainty surrounding Brexit right up until this latest agreement was L.P. acquire the Spreads Business (Upfield Foods) from Unilever PLC
reached, it is not for €6.8bn. 3
surprising that global
The Financials and
General Partners’ (GPs’)
Healthcare sectors
investments into the
attracted significant
Europe, Middle East and
attention from global GPs
Africa (EMEA) region
during the quarter, as
tumbled in Q3 2019.
deal value materially
Aggregate capital deployed into EMEA fell almost 40% between Q3
grew in spite of the overall
2018 and Q3 2019, decreasing from €25.2bn to €15.5bn. Deal count
decline in investments across EMEA region. Aggregate capital
also fell 12% over the same period. Additionally, fewer large deals –
deployed in the Financials sector increased more than two-fold, from
those valued at €1.0bn or more – were produced, from five deals with
only €0.8bn in Q3 2018 to €2.0bn in Q3 2019, notwithstanding a 33%
a total value of €13.7bn 1 in the same period last year to only three
reduction in the number of deals. Surprisingly, capital invested in
deals with a total value of €3.6bn this year. 2 Factoring in an economic
Healthcare rose by 62%, jumping from €1.4bn in Q3 2018 to €2.2bn in
slowdown in China, problems in South America and the threat of an
Q3 2019. This trend suggests that Private Equity’s (PE’s) focus at this
escalating US/China trade war, the drop is likely reflective of a more
point in the cycle is on industries that are non-cyclical in nature, such
challenging macro environment in general in 2019.
as Healthcare, certain areas of Technology and Business Services. 4 On
The UK and the Nordics were the hardest hit regions in Q3 2019. The the other hand, a single, large deal involving the acquisition by The
volume of investments flowing through the UK in the quarter
plummeted by 42% year-over year, from €7.2bn to €4.2bn, with deal
count also falling by 12% from 278 to 245. Similarly, Nordics targets
1 3
Q3 2018 global entry investments into EMEA-based targets in the €1.0bn+ plus bracket: Upfield Foods, ZPG KKR & Co. L.P. (NYSE:KKR) completed the acquisition of Spreads Business from Unilever PLC (LSE:ULVR) on
Limited, Pret A Manger (Europe) Ltd, TIP Trailer Services Management B.V., and Ammeraal Beltech Holding July 2, 2018 (As of 30/09/19). S&P Capital IQ Platform. Retrieved from
B.V. https://www.capitaliq.com/CIQDotNet/Transactions/TransactionDetail.aspx?transactionId=546954145&com
panyId=546954102
2
Q3 2019 global entry investments into EMEA-based targets in the €1.0bn+ plus bracket: Howden Group Ltd.,
4
Forgital Italy S.p.A., and Luminor Group AB. “Global Private Equity 2019: The Year Ahead.” (As of 20/02/19). Private Equity Wire. Retrieved from
https://www.privateequitywire.co.uk/special/global-private-equity-2019-year-ahead
3EMEA Private Equity Market Snapshot
Carlyle Group of Forgital Italy S.p.A. for €1.0bn 5 paved the way for the from €31.9bn to only €20.0bn in Q3 2019. Both cross-border and local
meteoric rise in capital deployed to the Materials sector, which targets felt the impact of the weakening investments, with the
jumped from €0.2bn to a high of percentage decline reaching double digits. EMEA-based GPs’
€1.7bn. investments into cross-border targets dipped by 39% to €10.8bn
across 339 deals, compared to €17.7bn across 318 deals in the same
With a hard Brexit still on the
period last year. Similarly, investments into local targets were down
line in Q3, the value of PE exits
30% falling from €14.2bn across 1,058 deals in the same period last
also dwindled. Global GPs’
year to €9.9bn across 942 deals this year.
aggregate capital realized from
EMEA based targets fell by 42% from €32.8bn to €18.8bn, and deal Among cross-border targets, Asian targets were hit the hardest with a
count was reduced by 23% from 297 to 219. The drop is likely 77% decline in capital
connected to the decline in large deal divestments, with only three received and ended this
large deals during the quarter with a total value of €7.4bn, 6 a quarter with aggregate
significant dive from the nine large deals with a total value of €18.0bn 7 investments of €1.9bn
in the same period last year. A decline in capital realized was evident across 74 deals
across all regions in EMEA, but most pronounced in Return on Equity compared to €8.4bn
targets, which were left with aggregate capital realized of only €1.0bn across 54 deals in the
compared to €5.4bn in the previous year. same period last year.
Even removing the single,
EMEA-based GPs’ Activity Weakens Globally large deal in Q3 2018 involving the acquisition of Sydney Motorway
During the quarter, Corporation Pty Limited for €5.8bn, 8 aggregate capital invested in
EMEA-based GPs’ Asian targets would still be down 30%. In the same way, UK targets
investment activity also also suffered a 66% dip in capital received from EMEA-based GPs,
showed signs of from €6.2bn across 240 deals to only €2.1bn across 215 deals.
slowdown, as capital Additionally, there were no deals in the €1bn plus range.
deployed fell by 35%
5 7
Carlyle Europe Partners V and Carlyle Partners VII, L.P. funds of The Carlyle Group L.P. (NasdaqGS:CG) Q3 2018 global exit investments into EMEA-based targets in the €1.0bn+ plus bracket: Sky Betting and
completed the acquisition of Forgital Italy S.p.A. from Fondo Italiano di Investimento fund of Neuberger Gaming, OOO Stroygazconsulting, Direct Energie Société Anonyme, Ufinet Telecom, S.A.U., iZettle AB, Pret A
Berman AIFM Limited, Asset Management Arm and Spezzapria family on September 11, 2019. (As of Manger (Europe) Ltd, SIG Combibloc Group AG, TIP Trailer Services Management B.V., and Ammeraal Beltech
30/09/19). S&P Capital IQ Platform. Retrieved from Holding B.V.
https://www.capitaliq.com/CIQDotNet/Transactions/TransactionDetail.aspx?transactionId=616267921&com
8
panyId=5722303 Transurban Group (ASX:TCL), Canada Pension Plan Investment Board, AustralianSuper Pty Ltd and Tawreed
Investments Ltd. completed the acquisition of 51% stake in Westconnex from the Government of New South
6
Q3 2019 global exit investments into EMEA-based targets in the €1.0bn+ plus bracket: BTG International Wales on September 27, 2018. (As of 30/09/19). S&P Capital IQ Platform. Retrieved from
Ltd., Global Switch Holdings Limited, and Parques Reunidos Servicios Centrales, S.A.
4EMEA Private Equity Market Snapshot
EMEA-based GPs continued to invest heavily in the Information €6.2bn across 33 deals, even with 33% fewer total number of deals.
Technology (IT) sector, putting in €5.5bn of new money across 463 The rise in total realized capital within Healthcare was largely boosted
deals during the quarter, similar to last year. The Healthcare sector, on by a single, and the largest, deal of the quarter, which involved the
the other hand, has only started to attract interest, as aggregate acquisition of BTG International by Boston Scientific for €3.7bn. 10
capital grew by 15% from €3.0bn to €3.5bn in Q3 2019, despite a 7%
Shifting the focus onto the Venture Capital (VC) universe reveals just a
decline in the number of deals. With no large deals executed during the
4% decline in global VC capital deployment in EMEA region, from
quarter, the Industrials, Consumer Discretionary, and Communication
€3.4bn in Q3 2018 to €3.3bn in Q3 2019 and fewer number of deals (562
Services sectors all suffered a decline in aggregate capital deployed,
versus 635 in the previous year). At 30%, IT received the highest
with the largest drop falling to the Industrials sector, with investments
allocation of capital from global VCs, standing €1.2bn across 252
plunging by 80% from €9.4bn across 157 deals in Q3 2018 to €1.9bn
deals. EMEA-based VC firms investments globally, on the other hand,
across 139 deals in Q3 2019.
grew incrementally at €6.7bn across 744 deals – a 3% growth – with
Divestiture activity of EMEA-based GPs also lessened, with a 55% the new money largely concentrated (57%) in North American targets.
reduction in aggregate capital realized when compared to the same On a sector view, Healthcare stood side by side with IT, amassing
period last year. €1.75bn of aggregate capital across 103 deals in Q3 2019 from €1.37bn
During the quarter, across 108 deals the year prior.
capital realized only
totaled €18.5bn
across 213 deals,
versus €40.9bn UK’s “Going Private” Deals Taking Off
across 274 deals in In line with the overall decline in deal volume across the EMEA region,
the previous year, PE investments in UK targets followed a similar trend in the first three
though it should be quarters of 2019 as compared to the year prior, although the decline
noted that a single exit deal in 2018 that saw Walmart acquire Flipkart was a marginal 5.5%, from 843 to 796 closed transactions (Chart 1).
Private for €13.5bn accounted for 33% of this value. 9 Even removing Over the same period, the reported PE capital deployed into UK targets
this outlier transaction, however, aggregate capital realized would still dropped 9% from £12.9bn to £11.8bn, resulting in the UK falling behind
be down 30%. From a sector view, the value realized from the the Nordics (£12.9bn), who attracted more GP’s capital year-to-date.
Healthcare industry more than tripled, from €2.6bn across 22 deals to The latter will most likely be a short-term phenomenon as some big-
https://www.capitaliq.com/CIQDotNet/Transactions/TransactionDetail.aspx?transactionId=579495878&com
10
panyId=285732216 Boston Scientific Corporation (NYSE:BSX) completed the acquisition of BTG plc (LSE:BTG) from Woodford
Investment Management Limited, Novo Holdings A/S, INVESCO Asset Management Limited and others on
9
Walmart Inc. (NYSE:WMT) completed the acquisition of 77% stake in Flipkart Private Limited from a group August 19, 2019. (As of 30/09/19). S&P Capital IQ Platform. Retrieved from
of sellers on August 18, 2018. (As of 30/09/19). S&P Capital IQ Platform. Retrieved from https://www.capitaliq.com/CIQDotNet/Transactions/TransactionDetail.aspx?transactionId=591945718&com
https://www.capitaliq.com/CIQDotNet/Transactions/TransactionDetail.aspx?transactionId=563483103&com panyId=127549
panyId=309452892
5EMEA Private Equity Market Snapshot
ticket PE-backed Public to Private (P2P) buyout deals, worth a
combined £8bn, are awaiting regulatory approval and would easily
propel the UK back to the top. Thoma Bravo sees an “attractive
opportunity to increase its exposure to the large and growing cyber
security market” 11 by acquiring the Sophos Group plc (LSE:SOPH), a
deal that values the firm in the range of £3.12bn, with an Implied
Enterprise Value (EV)/Last Twelve Months (LTM) Earnings Before
Interest Tax Depreciation and Amortization (EBITDA) multiple of
46.7x. 12 Furthermore, the US PE firm Advent International Corporation
already received the “green light” from investors but is awaiting the
British government’s decision on its acquisition of the UK Aerospace
and Defense company Cobham plc (LSE:COB) in a deal worth £4.5bn
and an Implied EV/LTM EBITDA multiple of 15.4x. 13
Data as of 30/09/19. Source: S&P Global Market Intelligence. For illustrative purposes only.
It is somewhat not surprising to see a slight uptick in the P2P activities
targeting UK-based firms, but it is worth highlighting the significant
increase in deal value. One factor that has potentially played a key role
is the weakening British Pound. The GBP/USD rate fell to a historical
low of $1.1885 in August this year as a result of the prolonged political
debate around Brexit. Additionally, there is a strong appetite among
institutional investors for private markets, as evidenced by record
levels of global PE fundraising activity. The significant amount of “dry
powder” in the market, as well as the low interest environment, are all
possible factors driving the attention of foreign PE players to UK public
11 13
“UK Security giant Sophos heading for £3.1bn acquisition.” (As of 31/10/2019). NS Tech. Retrieved from Cobham plc (LSE:COB). (As of 31/10/2019). S&P Capital IQ Platform. Retrieved from
https://tech.newstatesman.com/security/sophos-thoma-bravo-acquisition https://www.capitaliq.com/ciqdotnet/Transactions/transactionDetail.aspx?transactionId=640450270&comp
anyId=159951597
12
Sophos Group plc (LSE:SOPH). (As of 31/10/2019). S&P Capital IQ Platform. Retrieved from
https://www.capitaliq.com/ciqdotnet/Transactions/transactionDetail.aspx?transactionId=640450270&comp
anyId=159951597
6EMEA Private Equity Market Snapshot
assets. 14 According to S&P Capital IQ data, if the above mentioned
deals pass through the regulatory hurdles, the total amount of PE-
backed “Going Private” deals could reach levels not seen since 2011;
even more remarkably, the total deal value for those deals in 2019YTD
would top the total amount paid across all PE-backed P2P UK deals
over the past nine years (Chart 2).
Data as of 30/10/19. Source: S&P Global Market Intelligence. For illustrative purposes only.
tors/Our%20Insights/Private%20markets%20come%20of%20age/Private-markets-come-of-age-McKinsey-
14
“Private markets come of age.” (As of 31/10/2019). McKinsey & Company. Retrieved from Global-Private-Markets-Review-2019-vF.ashx
https://www.mckinsey.com/~/media/McKinsey/Industries/Private%20Equity%20and%20Principal%20Inves
7EMEA Private Equity Market Snapshot
A recent study published by the Thinking Ahead Institute 15 observed a PE Investments in European Communication Services
significant shift within the public and private markets and highlights
Targets 16 on Course to Reach a Record High in a Decade
some key implications as a result of the changing dynamics. First, the
average number of Initial Public Offerings per year across major Over the last five years, the Communication Services sector in EMEA
markets, like the US and the UK, has dramatically declined in the last has attracted relatively stable funding from global GPs when excluding
decade as compared to the period between 1980 and 2000. Secondly, mega deals. 17 In our study period, from January 1, 2015 to September
the number of firms listed on the US equity market dropped by 50%, to 30, 2019, the total amount invested into the sector hit €44.7bn across
just 4000 firms today, compared to the peak in the late 1990s. A key 2525 transactions. Put into context, the sector accounted for almost
driver of the reduced number of firms is the overall perception of public 10% of the share of aggregate PE capital deployed to the region over
markets as being increasingly impatient and short-term focused. the study period. Though the number of deals was almost unchanged,
Finally, there is an abundance of private capital, enabling private this year’s investment value totaled €4.7bn as of September 30, 2019,
companies to access new capital outside public markets. In today’s a substantial drop on the astounding €11.2bn put to work during the
ecosystem, companies that do go public are more likely to be more same period in 2018 (Chart 3).
mature and come with a significant price tag attached to them. Given
their long investment horizon, PE firms are taking advantage of the That said, three mega-deals worth more than €1bn helped to boost
above developments, and it is not surprising that institutional aggregate deal values in the first three quarters of 2018. They included
investors are ramping up their exposure to private markets as a way to a €3.5b acquisition of Irish Telecom Air Limited, 18 a €2.8 acquisition of
access fast-growing, innovative companies. UK-based ZPG Limited, 19 and a €1.1bn investment in Imagina Media
Audiovisual S.L. by Orient Hontai Capital. 20 By comparison, there was
only one mega deal on average in each year between 2014 and 2017.
15
The evolving role of public and private markets (As of 31/10/2019), Thinking Ahead Institute Retrieved from 18
Eir Limited. (As of 30/9/2019). S&P Capital IQ Platform. Retrieved from
https://www.thinkingaheadinstitute.org/-/media/TAI/Pdf/Research-Ideas/a_public/Private-Equity.pdf
https://www.capitaliq.com/CIQDotNet/Transactions/TransactionDetail.aspx?transactionId=547205239&com
16 panyId=47125283
As per the Global Industry Classification Standard (GICS) Communication Services sector comprises
Telecommunication Services and Media & Entertainment Industry Group. (As of 30/9/2019). S&P Capital 19
ZPG Limited. (As of 30/9/2019). S&P Capital IQ Platform. Retrieved from
Global Market Intelligence. Retrieved from
https://www.capitaliq.com/CIQDotNet/Transactions/TransactionDetail.aspx?transctionId=564134278&comp
https://www.spglobal.com/marketintelligence/en/documents/112727-gics-
anyId=10255072
mapbook_2018_v3_letter_digitalspreads.pdf
20
17 IMAGINA MEDIA AUDIOVISUAL, S.L. (As of 30/9/2019). S&P Capital IQ Platform. Retrieved from
Mega deal is considered to be €1bn or more in value.
https://www.capitaliq.com/CIQDotNet/Transactions/TransactionDetail.aspx?transactionId=540994879&com
panyId=7023697
8EMEA Private Equity Market Snapshot
Media and Services segment are consistently outperforming their
Media & Entertainment peers, with an average EBITDA margin of
18.5% and an average net profit margin of 14.5%, which likely explains
the strong deal-making activity into the segment.
Movies & Entertainment and Integrated Telecommunication Services
round up the top three most invested sub-industries, contributing 16%
and 15% of the share of money invested, respectively. Interestingly,
the largest growth deal into the Movies & Entertainment sub-industry
recorded so far this year was a €86m investment into Plimsoll
Productions Ltd. by LDC (Managers) Ltd. 21
As more broadcasters and media tech companies launch their own
streaming services, content is increasingly seen as a differentiating
factor in winning over viewers. As a result, programming budgets are
skyrocketing, likely leading to increased PE interest in the TV
production segment. According to S&P Global Market intelligence,
over the course of five years, over-the-top (OTT) video subscription in
the UK grew by a 106.4% Compound Annual Growth Rate (CAGR)
Data as of 30/09/19. Source: S&P Global Market Intelligence. For illustrative purposes only.
against a 3.4% multichannel equivalent, which makes the UK one of
the most developed OTT video markets in Europe, 22 though other
Within the broader Communication Services sector, some of the sub- European countries are following suit. For example, the streaming
industries appear more attractive to GPs, shaping the overall video market in Germany increased threefold from 2015, reaching
composition of entry deals. The Interactive Media and Services €14.6m in 2018. All this comes against the backdrop of stagnating
industry has by far dominated the Communication Services landscape, multichannel customer growth in Europe. Between 2019 and 2028 the
both in terms of deal volume and deal count. The industry attracted number of multichannel subscribers in Western Europe is projected to
€11.4bn (1526 deals), which amounts to a 25% share of aggregate deal increase by a CAGR of 0.4% (Chart 4), and by a CAGR of 1.3% for
values and 60% of the deal count over the study period. S&P Global
Market Intelligence fundamentals data for the last five years shows
that EMEA-based private companies operating in the Interactive
21
Plimsoll Productions Ltd. (As of 30/9/2019). S&P Capital IQ Platform. Retrieved from
https://www.capitaliq.com/ciqdotnet/Transactions/TransactionSummary.aspx?CompanyId=328485466&tra 22
S&P Global Market Intelligence (As of 30/9/2019). Retrieved from
nsactionViewType=1
https://platform.marketintelligence.spglobal.com/web/client?auth=inherit#news/article?id=53064635&Key
ProductLinkType=24
9EMEA Private Equity Market Snapshot
Eastern Europe (Chart 5). At the opposite end is the Middle East and
Africa, with a CAGR of 7%, the highest among other regions. 23
Data as of 30/09/19. Source: S&P Global Market Intelligence. For illustrative purposes only.
Data as of 30/09/19. Source: S&P Global Market Intelligence. For illustrative purposes only.
Regional Domination – Spotlight for the UK
The UK proved to be an unquestionable destination for investments
into Communication Services. The country amassed almost €12bn,
equivalent to the combined capital invested into France, Germany,
Spain and Sweden over the last five years, with strong funding from
local investors. Single buyer deals data reveals that in three quarters
23 S&P Global Market Intelligence (As of 30/9/2019). Retrieved from
https://platform.marketintelligence.spglobal.com/web/client?auth=inherit&overridecdc=1&#industry/Glob
alMultichannelRank
10EMEA Private Equity Market Snapshot
of completed transactions, money came from UK-based investors. FEATURE ARTICLE
While deal count in the first three quarters of 2019 was on par with the
four-year average over the same period in 2018, deal value amounted PE Leveraging ESG to Create Value
to €588mm, a drop of 65% from 2016 (€1.6bn) and way below the mark
of the unprecedented €4.2bn registered in 2018. Yet the collapse in PE has shifted its view of Environmental, Social and
invested capital in 2019 versus the previous period appears not to be Governance (ESG) factors to a means through which it can add value,
constrained to UK, but Europe wide. An exception is France, where rather than simply a way to mitigate risk.
money deployed to Communication Services targets (€2.2bn) has In some cases, assets in which a firm might consider investing have
already surpassed the previous years’ full figure. Notably, a €1.8bn implemented ESG strategies to the highest degree, and, as such, a firm
acquisition of SFR FTTH led by a consortium of Allianz Capital may deem there is no room for further improvement. At the other end
Partners, OMERS Infrastructure and AXA IM – Real Assets drove up of the spectrum, some assets are too risky for firms to considering
investment value. 24 improving. Between these two poles lies a gray area, which has come
Despite the falling deal count, PE players are willing to splash capital further into the spotlight as consumers grow increasingly more
when the right opportunity arises, driving up the M&A valuation. The ethically aware.
average Implied EV/EBITDA increased from 11.3x in 2015 to 12.5x in For instance, a potential investment may not have a strong ESG track
2018. record and therefore would raise red flags during due diligence, but
Although 2019 got off to a slow start for PE investments into the that also could translate into an opportunity for the investor in terms
Communications sector, as the year draws to a close, deal volume is of raising its ESG score and winning support from conscientious
on course to surpass the previous year’s level and even reach a decade consumers.
high. There is a further €15bn to be injected into the sector if all Cornelia Gomez, ESG director at PAI Partners, notes that investing in
announced deals are to close. Indeed, in the UK, deal value is set to businesses that have areas where they can improve on ESG is precisely
soar by €5bn once the Inmarsat Plc transaction 25 receives regulatory where PE owners can have an impact: "We will have a lot of levers to
approvals from competition authorities, showing that despite global improve them, to push them towards certifications, labeling, and more
political and economic uncertainties, the Communications sector in transparency, more traceability."
EMEA remains quite resilient.
Firms with PE strategies are searching for ways to make
improvements. The head of ESG at one large U.S.-headquartered
alternative asset manager, which manages billions of dollars in assets,
said the firm looks to advance ESG best practices across sectors
24 25
SFR FTTH. (As of 30/9/ 2019). S&P Capital IQ Platform. Retrieved from Inmarsat Plc (LSE:ISAT). (As of 30/9/2019). S&P Capital IQ Platform. Retrieved from
https://www.capitaliq.com/CIQDotNet/BusinessRel/investors.aspx?companyId=584271941 https://www.capitaliq.com/CIQDotNet/Transactions/TransactionDetail.aspx?transactionId=606921695&com
panyId=3574059
11EMEA Private Equity Market Snapshot
without taking unnecessary risks. It sees opportunities in companies more sustainable or more socially aware approach to a tricky industry
that need investments to reach best practice standards, particularly can also lead to investment ideas that can mitigate some of the
around safety and any type of environmental emission improvements. negatives.
Investments in companies that are more difficult to manage can also
Investment firm EQT AB's head of sustainability, Therése Lennehag,
create returns for investors. Where investments are more difficult to
recalled having a conversation with an LP about a tobacco restriction,
manage, "we feel that our investors are being appropriately rewarded
and the same day her firm announced it had agreed to invest in Fertin
for managing risks that somebody's got to manage," they said.
Pharma, a producer of medicated chewing gum primarily targeting
Moving Past the Negative those looking to quit smoking.
At one time, it took convincing to get those in the industry to see the "Sometimes we've been trying to take a different view on that negative
possible benefits of ESG. Some 10 years ago, Principles for screen," Lennehag said. She added that firms can find ways to make a
Responsible Investment (PRI), the United Nations-supported positive difference when they look to do more than just avoid certain
organization that aims to help investors incorporate ESG, had only a industries.
handful of PE members. Natasha Buckley, a senior manager at PRI,
ESG Part of Overall Process
said her organization had "quite difficult conversations" convincing
Limited and General Partners that ESG "is not about sacrificing Many in the industry note that it's important to distinguish ESG from
returns. This does not breach of your fiduciary duty." restriction-based investing. ESG is about integrating related factors
into the due diligence process "irrespective of whether or not we move
Initially, market participants commonly associated ESG with
forward on a deal" and across the ownership of an asset, said
investment restrictions that Limited Partners (LPs) required of their
Blackstone Group Inc.'s global head of ESG, Alison Fenton-Willock.
GPs, said Buckley. But investment restrictions are not necessarily tied
to ESG. Rather, they may take into account the avoidance of bad Today, ESG is incorporated into the due diligence carried out by LPs,
publicity, or sectors LPs already have strong market exposure to, PE and some are pushing PE firms for further information. The increased
industry sources said. Common examples are assets involved with awareness has changed how the industry views ESG, said Buckley,
tobacco, pornography, gambling or certain types of weapons. whose firm now has some 400 GPs as members. "It's gone from being
a marketing discussion or an investor relations discussion to be more
Although these sorts of restrictions are still in place for many LPs, they
about operational value creation," Buckley said.
are not looking to lengthen the list and limit the investments their
managers can make. Some managers have found that a push to take a
12EMEA Private Equity Market Snapshot – Data Pack
EMEA-Based Targets
Number and aggregate deal value (€bn) of PE entry Number and aggregate deal value (€bn) of PE entry
transactions by region transactions by industry
Q3 2018 vs. Q3 2019 Q3 2018 vs. Q3 2019
12 300 8 450
7 400
10 250
6 350
8 200 300
5
250
6 150 4
200
3
150
4 100
2 100
2 50 1 50
0 0
0 0
Africa BeNeLux France Germany Middle Nordics RoE Southern United
East Europe Kingdom
Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count
Number and aggregate deal value (€bn) of PE exit Number and aggregate deal value (€bn) of PE exit
transactions by region1 transactions by industry1
Q3 2018 vs. Q3 2019 Q3 2018 vs. Q3 2019
12 70
12 70
10 60 60
10
50 50
8 8
40 40
6 6
30 30
4 4
20
20
2 10
2 10
0 0
0 0
Africa BeNeLux France Germany Middle Nordics RoE Southern United
East Europe Kingdom
Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count
13
For illustrative purposes only. Source: S&P Global Market Intelligence. As of June 31, 2019EMEA Private Equity Market Snapshot – Data Pack
EMEA-Based GPs
Number and aggregate deal value (€bn) of PE entry Number and aggregate deal value (€bn) of PE entry
transactions by region transactions by industry
Q3 2018 vs. Q3 2019 Q3 2018 vs. Q3 2019
10 300 10 600
9 9
8 250 500
8
7 200 7 400
6
6
5 150
4 5 300
3 100 4
3 200
2 50
1 2 100
0 0 1
0 0
Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count
Number and aggregate deal value (€bn) of PE exit Number and aggregate deal value (€bn) of PE exit
transactions by region transactions by industry
Q3 2018 vs. Q3 2019 Q3 2018 vs. Q3 2019
16 60
12 60
14
50
12 10 50
40
10 8 40
8 30
6 30
6
20
4 4 20
10
2 2 10
0 0
0 0
Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count
14
For illustrative purposes only. Source: S&P Global Market Intelligence. As of June 31, 2019EMEA Private Equity Market Snapshot – Data Pack
VC EMEA-Based GPs
Number and aggregate deal value (€m) of VC entry Number and aggregate deal value (€m) of VC entry
transactions by region transactions by industry
Q3 2018 vs. Q3 2019 Q3 2018 vs. Q3 2019
3000 140 2000 400
120 1800 350
2500
1600
100 300
2000 1400
80 1200 250
1500
60 1000 200
1000 800
40 150
600
500 20 100
400
0 0 200 50
0 0
Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count
VC EMEA-Based Targets
Number and aggregate deal value (€m) of VC Number and aggregate deal value (€m) of VC
transactions by region transactions by industry ¹
Q3 2018 vs. Q3 2019 1400
Q3 2018 vs. Q3 2019
1000 160 350
900 140 1200 300
800
120 1000 250
700
600 100 800 200
500 80 600 150
400 60 400 100
300
40 200 50
200
100 20 0 0
0 0
Africa BeNeLux France Germany Middle Nordics RoE Southern UK
East Europe
Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count Q3 2018 Aggregate Deal Value Q3 2019 Aggregate Deal Value Q3 2018 Deal Count Q3 2019 Deal Count
15
For illustrative purposes only. Source: S&P Global Market Intelligence. As of June 31, 2019Data Pack
EMEA Private Equity Market Snapshot – Data Pack
Footnotes
1. The exit transaction aggregates have been calculated after removing the following deal to avoid overestimating the trend: Walmart Inc. (NYSE:WMT) completed the
acquisition of 77% stake in Flipkart Private Limited for 13.5bn EUR from a group of sellers on August 18, 2018. Retrieved from
https://www.capitaliq.com/CIQDotNet/Transactions/TransactionDetail.aspx?transactionId=563483103&companyId=309452892
Multiples Table EMEA
Implied Enterprise Value/EBITDA EMEA PE exits 01/07/2018 - 30/09/2019 EMEA all M&A 01/07/2018 - 30/09/2019
Communication Services 16.1 12.3
Consumer Discretionary 12.0 11.0
Consumer Staples 6.3 11.9
Energy 8.2 8.6
Financials 13.1 10.7
Health Care 13.5 13.5
Industrials 11.6 9.5
Information Technology 12.9 12.6
Materials 10.3 9.1
Real Estate 33.4 22.3
Utilities 12.3 11.0
Implied Equity Value/LTM Net Income EMEA PE exits 01/07/2018 - 30/09/2019 EMEA all M&A 01/07/2018 - 30/09/2019
Communication Services 34.0 27.5
Consumer Discretionary 20.5 17.8
Consumer Staples 7.0 15.7
Energy 15.4 17.1
Financials 21.6 15.0
Health Care 28.3 20.4
Industrials 14.7 14.3
Information Technology 32.8 20.2
Materials 8.4 15.5
Real Estate 7.4 12.5
Utilities 36.9 24.4
• Multiples highlighted in bold & italics represent the sector average over a 2 year time horizon in order to provide a more comprehensive sector average
• Colour legend can be defined as "RED" representing the lowest multiple and "GREEN" representing the highest multiple observed across industry sectors,
deal structures and multiple types during the period mentioned.
16
For illustrative purposes only. Source: S&P Global Market Intelligence. As of June 31, 2019EMEA Private Equity Market Snapshot – Contact us
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