Deals figures raise North East hopes

Jan 6 2010 by Iain Laing, The Journal

HOPES of rising business confidence in the North East have been boosted by research showing a massive increase in corporate deals in the region.

The value of deals in the region shot up from £375m in the third quarter to £986m in the last quarter of 2009, the full-year rise being from £1bn to £1.5bn said business data group Experian.

The North East was among only four regions to register an increase in deal values over the three month period, Scotland registering the biggest quarter-on-quarter leap, from £2.3bn to £25bn.

The North East annual figures were boosted by big deals including the £323.6m acquisition of Middlesbrough-based PD Ports by Brookfield Asset Management and the raising of £250m by Newcastle-based landlord Grainger plc.

This helped the North East to record a 50% increase in the value of deals last year to over £1.5bn, outperforming the overall picture for the UK, with £272.6bn-worth of transactions representing a meagre 0.22% increase on 2008.

But this region’s deals were worth less than in any part of the UK other than Wales. In the South East the value of deals went up from £23bn to £28.6bn in 2009 although the North West saw a small drop to £9.3bn and Yorkshire saw a near 80% drop to £1.58bn. The figures also revealed that, along with the 10 other regions in the survey, the North East saw a fall in the number of deals in 2009 to 143 from 243 in 2008.

Brian Rarity, strategic consultant for Experian corporate finance, said: “ While the increase on year-on-year value is welcome, the very substantial increase from Q3 to Q4 is a short term trend that is much more likely to prove a reliable indicator of future events. The situation therefore is one of quiet cautious confidence.”

The busiest advisers in the last quarter were Newcastle-based Dickinson Dees and Muckle, followed by Ward Hadaway and Hammonds. But they remain cautious.

Sean Nicolson, corporate finance partner at Dickinson Dees, said: “I wouldn’t read too much into the last quarter, as I don’t believe it is an indication of how the market will perform over the current quarter. I think the PD Ports deal was a bit of a one off and I don’t expect anything of that size over the next few months.

“I am more positive about the medium and small caps sector as it is currently showing more promise. However, a lot will depend on the outcome of the General Election.”