Financial sector assets appear to be attracting significant attention from private equity and venture capital firms. We see this trend emerging at both ends of the private equity spectrum with increased venture capital (VC) activity in financial sector start-ups and in larger GPs acquiring distressed loan portfolios. We examine this trend in more detail in the latest edition of the EMEA Private Equity Market Snapshot.
2014 saw the highest number of deals made in the Financial sector in post-crisis years. This is consistent with the 2011 fundraising peak where twenty funds targeting financial sector assets reached a final close, resulting in increased dry powder. Analysing data from the S&P Capital IQ Platform it seems this activity has continued, not least in loan portfolio acquisitions with a steady deal flow over the course of 2014.
The increased level of deal activity by private equity funds within the credit space is palpable, over the course of 2014 the top 10 EMEA loan portfolio acquisitions by private equity investors represented some €6.8bn of invested capital. These acquisitions are in keeping with the broader trend of private equity firms moving into asset classes that traditionally are outside corporate turnarounds and LBOs remit.
The opportunity for private equity firms within the non-performing loan space is large; in October 2014 the European Central Bank published the results of its Asset Quality Review which identified €135.5 billion of non-performing loans across in-scope banks. The need for European banks to divest non-performing loan stocks to meet capital adequacy requirements is likely to provide further opportunities for the private equity firms which have built up experience in these acquisitions in the years following the global financial crisis. Taking this into consideration it would appear that the prominence of these deals within the EMEA private equity market is here to stay in 2015.
 European Central Bank Comprehensive Assessment Report – 26th October 2014 - https://www.bankingsupervision.europa.eu/ecb/pub/pdf/aggregatereportonthecomprehensiveassessment201410.en.pdf