Secondary deals buoy UK buyout market in Q3 2004

Twelve of these were secondary transactions and, as they accounted for 54 percent of the quarter's value, these deals dominate the quarter's value tables - eight of the top ten deals by value were secondary buyouts.

According to figures released by KPMG's Private Equity Group (which tracks UK buyouts with value over £10 million) transactions with a total value of £4.49 billion were completed in the UK in Q3 2004. The average value per deal was £104m.

Key Findings

• In Q3 2004 there were 43 deals totaling £4.49bn compared to 39 deals worth £3.30bn for Q3 2003.
• Average value of transactions in Q3 2004 was £104m compared to £85m for Q3 2003.
• There were 4 deals above £250m in Q3 2004: Four Seasons Healthcare Group (£775m), ABB (£524m), Odeon Cinema / UCI (£500m) and Safety-Kleen Europe (£280m).
• 3 public-to-private (PTP) deals were completed in Q3 2004 with a total value of £158m - Yates Group (£93m), Wintrust (£53m) and Integrated Dental Holdings (12m).
• Twelve deals in Q3 2004 were secondary buyouts - Four Seasons Healthcare Group ( £775), Safety-Kleen Europe (£280m), Maplin Electronics (£224m), Pets at Home (£230m), Paramount Hotels (£215m), Southern Cross Healthcare (£167m), Survitec (£146m), Hillarys Blinds (£115), IRIS Software (105m), Nightfreight (£89m), Palletways (£50m) and Ster Century (£32m).

Commenting on the quarter, Charles Milner, Head of Corporate Finance at KPMG's Private Equity Group said, "These secondary deals have introduced a healthy degree of liquidity to the private equity market. Undoubtedly a number of these are as a result of houses keen to exit their current positions ahead of further fundraising campaigns over the next year. But this is only part of the story. Private equity houses are successfully returning funds to investors through a variety of other means whether through trade sales, IPOs or refinancing. The high number of secondaries is in part a reflection of the wall of capital waiting to be invested in private equity and this is resulting in good prices for these sales."

Even though there were no deals completed over the £1bn mark, this was the highest value third quarter for three years. 2004 also looks set to be a more active year than 2003. With over £13bn of deals already registered as completed and a further £4bn plus pending, the combined total is already higher than the final figure for last year of £15.6bn.

Milner added, "2004 looks set to finish on a high. Already in the fourth quarter, two separate billion pound deals, the AA and Saga, have featured and we are seeing strong pipeline of activity in our business across all deal sizes. The fundamentals of the buyside of the private equity equation look strong with private equity houses confident ahead of the next round of fundraising and banks prepared to back healthy debt ratios in the quality deals."

The KPMG Private Equity Group brings together our most experienced private equity practitioners from across the firm to devote their full attention to meeting the needs of the private equity community. The Private Equity Group gives support throughout all stages of the private equity life cycle, combining in-depth knowledge and understanding of the private equity market with financial, commercial and operational skills in order to address the issues that matter to the private equity community.