Paul Mankin, corporate finance partner at PwC, reviews activity in the North East deals market
THE deepening eurozone crisis and fears over a second global recession pushed the FTSE 100 below the 5,000 mark at the end of the third quarter of the year.
Despite the economic situation, Dealogic reported a 9% increase in global deal volumes for the first nine months of 2011 compared to the same period in 2010.
Comparable figures for the North East (excluding growth capital investments) also show an increase in deal volumes of 9%.
Although the strong start to the year in terms of deal flow was maintained during the three-month period ended September 30, with 40 transactions completing, disclosed deal values for the third quarter were significantly down on previous quarters this year at £34m. This is the lowest disclosed deal value for a quarterly period for two years.
Two North East businesses continued to grow through acquisitions. Financial services firm Moneygate Group, which raised a significant amount of funding last year, bought two further IFA businesses in as many months. In July, Moneygate acquired London-based Equus Independent Financial Management followed by Sheffield-based Results Financial the following month.
Technology Services Group made its second acquisition of the year in July and the 25th acquisition since the company was launched in 2003.
The largest disclosed transaction in the quarter was the disposal by Carr’s Milling of its fertiliser business to Irish agri-nutrition products supplier Origin Enterprises. The only other cross-border disposal was by the holding company of Onyx Scientific which was sold to Indian pharmaceuticals firm Ipca Laboratories in September.
Cramlington-based Badekabiner changed hands again during the quarter. The only UK site of Danish company EJ Badekabiner was sold out of administration to Galliford Try plc last November. Although Galliford Try will retain a minority interest, the holding company set up to acquire Badekabiner is majority-owned by Mike Hampton and Andrew Forshaw.
The final quarter of the year looks set to provide a strong end to 2011, with a number of significant transactions announced earlier in the year completing. The largest of these is the acquisition of Northumbrian Water.
A number of substantial private equity investments in the region were also announced after the quarter end, despite a slowdown in the UK buyout market. Although challenges remain in the banking sector it is clear that deals in the region are still being done.
