European private equity deal activity grows in Q2

European private equity deal volume and value posted their second-highest quarterly numbers ever in the second quarter, boosted by core middle-market deal activity.

A report from PitchBook Data shows that general partners closed on 1,800 deals in the second quarter totaling $201.9bn in the quarter, up 161.2% and 137.3%, respectively, vs. the first quarter of 2020. In the first quarter of 2021, general partners closed more than 1,936 transactions totaling €158.8bn.

Strong leveraged lending markets resulting from institutional investors’ liquidity and aggressive hunt for yield have made financing and refinancing deals historically cheap, Pitchbook said.

European private equity exit activity had a good run in the second quarter with 369 exits. The quarter’s exit value reached a total of €126.3bn.

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In the first quarter, exit value reached €115.5bn. In the six months ended June 30, 2020, exit value totaled €55bn, while in three months ended March 31, it stood at €35.7bn.

A large uptick in liquidity events greater than €2.5bn was the main driver for exits in the quarter, with five exits worth a combined €27bn taking place in the three-month period, Pitchbook said.

By exit type, the quarter was dominated by public listings ahead of buyouts and acquisitions. In the second quarter, 29 public listings worth €34.8bn closed, increasing 314.3% and 148.4% year over year, respectively.

Pitchbook also said the zero-interest-rate environment, public market volatility and correlation, and the potential for significantly higher risk-adjusted returns from alternatives continued to fuel the confidence of limited partners. Fundraising volume as of June 30 stood at €59.6bn, up from €22.1bn as of March 31.

In the six month ended June 30, 2020, fundraising volume was €19.6bn and 38 funds were closed.

Source: Pensions & Investments

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