Deal value breaks £10bn barrier

The UK buyout market had its best performance ever in Q2 2006, with the value of deals breaking the £10bn mark for the first time, according to research from KPMG’s Private Equity Group. Completed buyouts between April and June increased to 46 with a total value of £10.08bn. Over the same time period in 2005, only 44 deals were agreed totalling £8.34bn.

The research is revealing and not only shows the scale of deals is increasing, cue the £2.2bn purchase of General Healthcare group by Apax and Brockton Capital and the £1.8bn sale of Select Service Partners by Compass, but also shows that much of the increased interest in UK-based companies is from overseas private equity firms. “In fact, the top six deals completed this quarter included overseas private equity houses,” said Michael McDonagh, corporate finance partner in KPMG’s Private Equity Group.

The research also indicated that private equity firms are increasingly focused on buying out service-based business that provide leisure, Orchid Pubs (£571m); healthcare, Paragon Healthcare group (£322m); and financial services, Gartmore Investment Management (£550m). With many of these businesses underpinned by consumer spending, it suggests that private equity funds have confidence in the continuing strength and stability of the UK economy.