Private Equity in Europe: Headlines Bad, Reality Good

August 1, 2019 | Private Equity
https://dailyalts.com/wp-content/uploads/2019/08/greece-833380_1920-7-pe-europe.jpg

As valuations drop, Europe’s private equity investors are chasing bargains

In recent years, investors have grown tired by Europe’s ongoing “tomorrow-story.”

The Eurozone has experienced an economic downturn since mid-2018. Most forecasters have cut their outlooks for the region. And, the European Central Bank expects that growth will hover around 1% for the year.

Disillusioned investors have pushed down equity valuations to attractive levels. By the end of 2018, European stock valuations fell below their 10-year average, according to Bloomberg.

Ongoing concerns about the Brexit, Italy’s banking system, sluggish economic growth, and more pressed forward one-year P-E ratios to their lowest levels since 2013.

That pullback has private equity firms circling for deals. LBO activity has remained strong in Europe. Bloomberg reports that pending and completed buyout deals through the first eight months of 2019 totaled $51.3 billion. That figure is higher than the first eight months of 2017; however, it trails the $55.6 billion allocated during the same period in 2018.

Still, the figures indicate a post-crisis recovery.

Private equity dry powder and the attraction of cheap valuations

Private equity funds are holding record levels of cash.

Estimates now peg global dry powder at $2.5 trillion. This remarkable sum heightens competition for large-sized deals across Europe. Notable, recent deals include Advent’s $4.8 billion offer for British defense giant Cobham Plc, Blackstone’s $6.1 billion push for Legoland operator Merlin, and Bain’s $3.8 billion bid for German lighting giant Osram Licht.

It’s clear that despite ongoing economic woes, dealmaking is thriving.

“The headlines are bad, the reality is good,” David Marcus, the head of Evermore Global Advisors, told Bloomberg. “There’s so much value in European businesses.”

Dealmaking could receive another boost in the months ahead. Markets anticipate another round of monetary stimulus from the European Central Bank. Any momentum from this stimulus will likely spark more interest in buyouts leveraged with even cheaper money.

So far, shareholders have benefited from ongoing LBO activity in the region.

 

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Shape

Latest Alternative Investment News

https://dailyalts.com/wp-content/uploads/2021/05/hand-898232_640.jpg
Artificial Intelligence: A Molecule For Alzheimer’s Created By Exscientia’s AI Enters Clinical Trials

Oxford, UK-based Exscientia uses AI to design and create drug candidate molecules satisfying complex therapeutic requirements with revolutionary efficiency. Joint research by Exscientia with Sumitomo Dainippon Pharma Co., Ltd. (TYO:…

https://dailyalts.com/wp-content/uploads/2021/05/clothes-5371410_640.jpg
Venture Capital: Vinted, The Marketplace For Previously Owned Clothing, Raises $303M
May 13, 2021     News, Venture Capital

Vinted, a European startup that runs a marketplace for used clothing and home goods, announced its raise of $303 million at a valuation of $4.5 billion, post-money. That valuation is…

https://dailyalts.com/wp-content/uploads/2021/05/68479250_1154496388083970_3396968202243145728_n.jpg
FinTech: German Regulator BaFin Hauls Up N26 On Money Laundering Lapses
May 13, 2021     FinTech, News

On Wednesday, Germany’s Federal Financial Supervisory Authority (BaFin) ordered challenger bank N26 to implement appropriate internal controls and safeguards and comply with general due diligence requirements to prevent money laundering…

https://dailyalts.com/wp-content/uploads/2021/05/wine-1543170_640.jpg
Liquid Alternatives: Advisors Need Creative (Liquid) Alternatives – Aspiriant
May 13, 2021     Liquid Alternatives, News

The traditional [60:40] portfolio may no longer work over the long term. Sandi Bragar, managing director at Aspiriant, a wealth management firm based in Los Angeles with $14 billion in…