THE value of private equity buyouts in the region more than trebled to £281m in 2011.
The latest data from the Centre for Management Buyout Research, sponsored by Equistone Partners Europe and Ernst & Young reveals that the 2011 buyout figure in the region was also more than five times the value of deals in 2009.
But despite the value increase, just five private equity buyouts were completed in the North-east last year.
However, the North-east data bucked the trend in the rest of the UK. Nationally, private equity buyout values dropped by over a third (36%) to £12.1bn in 2011 (2010: £18.8bn), while the number of deals decreased slightly over the year from 183 in 2010 to 176 in 2011.
The region’s private equity buyout value figure of £281m was swelled by Lloyds TSB Development Capital’s exit from Newcastle-based Aesica Pharmaceuticals for more than £100m.
The bulk of other North-east deals were in the lower-mid market, with three of the five in the £25m to £50m bracket. The buyouts were spread across sectors, with one each in business and support services, food and drink, healthcare, manufacturing and technology, media and telecommunications. Three of the five deals, meanwhile, were secondary buyouts.
Steve O’Hare, partner at Equistone Partners Europe in the North, said: “While the number of private equity deals completed in the North-east remained flat in 2011, it is encouraging to see that the total value of the transactions increased from 2010.
“It is also clear that lower-mid market deals remain key for the North-east.”
Sachin Date, EMEIA Private Equity Leader at Ernst & Young, said: “The UK buyout market hasn't held up as well as some of its European neighbours in 2011, particularly France and Sweden, both of which saw increases from 2010 values. Deals have been taking longer to complete and, for private equity firms, financing has been difficult to obtain, impacting the volume of deals.
“However, while the market has been subdued, we must remember that total deal value in 2011 is more than double compared with the trough of 2009 and average deal size is 74% higher than 2009. Looking forward, the pipeline of deals in the first half of 2012 is showing some signs of recovery with a few high-value deals pending completion suggesting there is still confidence in the industry.”