Which EMEA Private Equity Trends Have Continued Throughout 2014

As 2014 draws to a close, we wanted to leave you with an update on some of the trends in the EMEA Private Equity (PE) market that we uncovered over the course of the year using S&P Capital IQ’s transaction, financial, and private equity data. These trends were highlighted and published in the three 2014 issues of our quarterly report EMEA Private Equity Market Snapshot.

In the inaugural edition of the report, we examined how information technology, constituting 40.1% of all entry investments in EMEA, was the most active industry sector for Private Equity investment plays in 2013, whilst consumer discretionary exits produced the largest volume (€37.5bn) of realised capital.   Looking at 2014 to 1st December, information technology is now the foremost active sector for the number of capital deployments and has also overtaken consumer discretionary to produce, on a sector level, the largest volume of capital harvested at exit - €42.5bn.  Information technology investments constituted 39.2% of all entries in January to 1st December 2014, down a fractional 0.9% compared to investment activity over the same period in 2013. The consumer discretionary sector’s moment in the sun has faded, however, with sector exit volume falling to €26.4bn, down 30% on 2013’s figure. Download Issue 1, March 2014.

In issue two we outlined the growing trend of investment into Sub-Saharan Africa (SSA). At the time of publication in June, capital deployed by EMEA firms into the region between January and April 2014 stood at €748.7mn - significantly higher than in 2013.  Over the remainder of the year to 1st December, this positive momentum faded somewhat whilst activity on the exit side picked up.  Sub-Saharan African target company investment between January and 1st December fell slightly (-4.3%) to 134 new investments compared to the 140 made in the same period in 2013.  However, capital deployed by PE firms into SSA target companies stands at €2.4bn between January and 1st December - a 33% increase from the €1.8bn invested over the same period in 2013.  Looking at the movement of capital in greater detail we see that there was a sharp drop off in investments in Q2, beginning in May and coinciding with the increasing significance of the Ebola outbreak, suggesting that this may have been a headwind to investment.  At the same time, exits within the region have increased over 2014 to stand at 45 exits realising a significant €2bn of capital - up from 2013’s €720mn. Download Issue 2, June 2014.

Finally, in the latest edition of the report we examined the growing trend of Asian private equity firms investing private capital in Europe.  2013 represented a new record in terms of the level of investment standing at €8.24bn, a 10-year record when excluding as an anomaly the 2008 post-financial crisis volume spike when Asian investors pumped money into EMEA financial entities.  This trend has picked up pace over the course of 2014 as January to 1st December figures indicate that 2014 will be a new high watermark for Asia-to-Europe transactions.  As of 1st December, 52 investments totalling €8.8bn have already closed, representing some 58% more deals and 6.7% higher capital deployment than in the whole of 2013. Download Issue 3, September 2014.

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