Europe buy and build PE activity reaches record level thanks to Nordics boost

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European private equity buy and build activity in the first half of 2019 reached the highest level ever recorded thanks to a strong performance in the Nordics, new research shows.

A total of 368 add-on deals were made for PE-backed European-headquartered companies in H1, totalling €2.4bn, according to provisional data from Silverfleet Capital’s latest European Buy & Build Monitor.

That is up nine per cent from H1 2018’s 338, marking the highest level of add-on activity for the half-year since Silverfleet started tracking the data in 1998.

Eight add-ons with values greater than €65m were announced in the first half of 2019, just one lower than the number announced in H1 2018.

The Nordic region was the most active in H1 2019 with 72 add-ons announced, rebounding to levels seen in the first half of 2017, Silverfleet said.

The UK & Ireland was in second place with 58 add-ons, significantly fewer than in previous periods, with Silvertfleet suggesting Brexit may have deterred some companies from pursuing buy and build in the region.

Central Eastern Europe (CEE) and Southeast Europe (SEE), North America and Benelux also saw notable additional add-on activity, but the DACH region  usually one of the regions with the most buy and build activity  performed poorly relative to H1 2018, possibly due to tougher economic conditions.

Silverfleet managing partner Gareth Whiley said, “Our latest European Buy & Build Monitor shows that add-on activity in Europe in the first half of 2019 reached its highest level since we started tracking the data in 1998.

“Interestingly the data also appears to show that the historic correlation between levels of add-on activity and M&A and PE deal-volumes generally may be breaking down, with the latter indices showing declines in H1 2019.

“We think that this continues to show the importance of buy & build as a value creation tool for private equity even in the face of greater general market uncertainty.”

The largest add-on in H1 2019 was IK-backed Colisée’s acquisition of Armonea to create the fourth largest elderly care group in Europe.

The combined entity is anticipated to have about €1bn of revenues, with the transaction reported to be worth about €550m.

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