Private equity barometer | Q2 2022

InEU/EEAforProfessionalInvestors,inSwitzerlandforQualifiedInvestors- notauthorisedfordistributiontoretailinvestorsintheseregions Privateequitybarometer Q22022figuresbasedonpreliminarydatafromUnquote, Europe’sspecialistprivateequityinformationprovider abrdn.com Contents Introduction3 Keyfindings4 Valuesupandvolumesdownasvolatilitytakes5 holdinEuropeanPEinQ22022 OverallEuropeanPE6 Quarterlyfocus7 Buyouts8 Growthcapital12 Early-stage14 Q22022PreliminaryData2 3 Executivesummary Bifurcationsetsin Europeanprivateequity(PE)activitybifurcatedinQ22022,withdealvaluereachingoneofthehighestlevelsonUnquoterecordandvolumesinkingtoitslowestinatleastfouryears.Thisisaconsequenceofasignificantslowdowninventurecapital(VC)activityasnewmacroeconomicandmarketdynamicsemerge,withVCsittingfurtheroutalongtheriskcurve. Giventhatstart-updealstendtobesmall,thishashadadisproportionateimpactonPEdealvolumebutminimaleffectonoverallvalue.ThisdivergencemaynarrowintheyearaheadasinterestratesandthecostoffinancinginEuroperise.Forthefirsttimein11years,theEuropeanCentralBankhasraiseditsbaserate,by50bps,withfurthertighteninglikelyinSeptemberastheneedtotemperinflationoutweighsgrowthconcerns.Buyoutfundsrelymoreheavilyondebtfinancingtobacktheirtransactionsandsotightercreditconditionshavethepotentialtodampentheirlarger-capdeals,thoughthisremainstobeseen. KarinHyland SeniorInvestmentDirector,abrdnPrivateEquity Q22022PreliminaryData Keyfindings OverallEuropeanPE .EuropeanPEdealvaluewasupbynearly10%inQ22022toEUR102.6bn,thehighestlevelofactivitysinceQ32021. .Atthesametime,PEdealvolumefelltoafour-yearlowof720dealsinQ22022,down23%onQ1. .Asvaluehasrisenandvolumehasfallen,theaveragedealsizewasuptoEUR142.5m–thehighestfiguresince2018and43%uponQ12022. Buyouts .AggregateEuropeanbuyoutvaluesurgedtoEUR83.2bninQ2,upbyafull27%onQ1andthehighestlevelinatleastfouryears. .Thiscamedespitevolumeeasingoffby8%to280buyoutsinthesameperiod. .TheaveragebuyoutdealvalueinQ22022soaredtoEUR297.2m,up28%onthepreviousquarterandanewhighwatermark. .Thevalueoflarge-capbuyouts(thoseworthmorethanEUR1bn)surgedtoEUR47.6bn,wellaheadofanyothercategoryand37%abovethetrailingaveragethroughtothebeginningof2018. .TheUK&IrelandandFrancewereneckandneck,withbothmarketscounting57buyoutsinQ2. .TheUK&Irelandovershadowedeveryothermarket byafactorofmorethantwo(measuredbyvalue),withEUR28.2bnrecorded. .Overathirdofthisvaluecamefromasingletransaction:theEUR10.8bnbuyoutofAccessGroupbyGIC,TAAssociatesandHgCapital. Growthcapital .Growthcapitaldealsfellby27%inQ2to377transactionsversus515inQ1. .Totalgrowthdealvaluetookasimilarturn,fallingby24%toEUR18.2bn.WhilethisrepresentsthelowestfiguresinceQ42020,itisstillwellabovepre-pandemiclevels. .TheUK&Irelandwasthemostactiveregionforgrowthcapitaldeals,withatotalof113,puttingitwellaheadofFrance’s74. .TheDACHregionwasinthirdplacewith55transactions,itsvolumemorethanhalving,quarter-on-quarter. .TheUK&Irelandalsocameoutontopinvalueterms,claimingEUR4.8bningrowthdeals,whileFranceandDACHfollowedclosebehindwithEUR4.1bnandEUR3.8bn,respectively. .ThelargestgrowthcapitaldealinQ2wasaEUR1.5bninvestmentinLiguedeFootballProfessionnel,themediabusinessofFrenchfootballleagueLigue1,byCVCCapitalPartners. Early-stage .The63early-stagedealsrecordedinQ2representsa46%droponthepreviousquarter,asVCssatonthesidelines. .Dealvaluewasalsodownbyasmuchas70%toEUR1.2bninQ2–thoughQ1wasanoutlier,andthesecondquarterisbroadlyinlinewiththepre-pandemicaverage. .Yetagain,theUK&Irelandledtheway,with29 early-stagedeals,nearlythreetimestheNordics’tallyandashiftawayfromDACH’stypicallydominantearly-stageindustry. .TheUK&Irelandsimilarlyclaimedthehighestshareofearly-stagedealvalueinQ2(EUR409.7m),playinghosttothelargestdealinEurope. .ThistopfundingroundwasworthEUR99.9mandsawEquitixbackFreedomFibre,awholesalefibrenetworkoperatorthatwasformedlittleoverayearago. Source:UnquoteData(14July2022) Q22022PreliminaryData4 ValuesupandvolumesdownasvolatilitytakesholdinEuropeanPEinQ22022 Q22022PreliminaryData5 OverallEuropeanPE EuropeanPEhaslostsomemomentum,despitefundstargetinglarger-capdealsremainingveryactive.InQ2,dealvaluereachedEUR102.6bn,a10%gainonthe previousquarterandoneofthelargestincreasesseeninyears.Thisoutperformancebeliesasignificantsofteninginvolumeduringtheperiod,asdealcountfelltoafour-yearlowof720,down23%onQ1. Thispusheduptheaveragedealsize,byasmuchas43%,aslargerGPsproactivelydeployedtheiraccumulateddrypowder,whileventurefundssteppedbackontothesidelines. Unsurprisingly,giventheirlargerindividualsize,Europe’sPEmarketisconsistentlydominatedbybuyouts.ThesedealstotalledEUR83.2bninQ2–up27%onQ1andthehighestlevelseeninthepastfouryears.Thiswasachieveddespitevolumeslippingby8%to280buyouts. Volume&valueofallEuropeanprivateequity 1,200 1,000 800 Volume 600 400 200 120 100 Value(EURbn) 80 60 40 20 Therewere377growthcapitaldealsinQ2,down27% 0 Q1Q2 Q3Q4 Q1Q2 Q3Q4 0 Q1Q2 quarter-on-quarter.Growthdealvaluealsoslipped,fallingfromEUR24bntoEUR18.2bnduringthesameperiod.Total 2020 Volume Value(EURbn) 2021 2022 Volume Valu