UK private equity in Q4 at lowest level in 13 years

Deals across all value ranges saw significant decreases in the latest quarter. In the sub-£10m bracket, deals have fallen by 41 per cent on quarter three, while deals in the £10-£100m range fell by 59 per cent. The largest drop was in the £100-500m range, which witnessed a fall of 78 per cent on quarter three.

The 2008 total now stands at £19.1bn from 549 deals, down over 58 per cent on 2007's record figure of £45.9bn and 671 deals.

Christiian Marriott, director at Barclays Private Equity, said, 'Last year started off in good shape with the strongest quarter one on record. Subsequent quarters, however, all witnessed marked falls in buy-out activity as the market squeeze has tightened. To set today's figures in context, the size of the market in quarter four 2008 is not considerably higher than the largest European buy-out fund raised in 1995 ($700m).

'Analysis of deals by sector, while broadly reflecting the downturn, also reveals some interesting trends. Deals in the business and support services sector have increased to 33.4 per cent of total value, up from 16 per cent in 2007, reflecting investors' desire for opportunities in resilient sectors. The retail sector, on the other hand, has experienced a huge drop in its share of buy-out activity from 31.2 per cent of value in 2007 to just 3.2 per cent last year. This is a consequence of issues in the wider economy and concerns about the buoyancy of consumer spending on the high street.

'Where the market goes from here is anyone's guess. If senior lenders return to the buy-out market and business sentiment begins to improve, buy-out activity should increase in first half of 2009, but there is still a lot of uncertainty out there,' Marriott added.

CMBOR was founded at Nottingham University Business School in 1986. Its data covers all buy-out activity and therefore includes transactions funded on a cash or debt-only basis as well as traditional private equity-funded buy-outs.

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