EMEA Private Equity Market Sees Healthy Start to 2014 Despite April Hiccup, says S&P Capital IQ

Strong inflows into healthcare sector and Sub-Saharan Africa

Jun 25, 2014 / 09:00 AM
London, UK

London -  June 25, 2014 -The deployment of private equity capital in the Europe, Middle East and Africa (EMEA) region reached healthy levels in the first four months of 2014 despite a hiccup in April, says S&P Capital IQ in a new report.

General partners in EMEA deployed €3.1bn more capital from January to March compared to the same period last year. However, deal volume in April was only €4.2bn versus €9.5bn in April 2013, leaving the aggregate for new entry deals at €23.2bn, or 4.5% lower than the same period last year, according to the latest quarterly EMEA Private Equity Market Snapshot report.

The strongest trend emerging so far in 2014 has been increased activity in Sub-Saharan Africa (SSA), with private equity firms located in EMEA increasing their entry level capital to €748.7mn, or 803.1% higher than the capital deployed in the same period last year, and raising the deal count by 41% to 41 deals.

The report also notes that the SSA region is increasingly a destination for private equity firms globally - SSA activity increased by 38% in terms of deal counts and 262% in terms of invested capital (€806mn) compared to January-April 2013.

"The drivers behind the growth in private equity activity in the SSA region have been numerous and complex," commented Silvina Aldeco-Martinez, Managing Director at S&P Capital IQ. Sub-Saharan Africa appears to be rapidly moving from an agrarian to a consumer-based economy, largely due to its rapidly expanding middle class. Furthermore, the region has reduced its reliance on exports to Europe and other developed markets, and increased its exposure to higher growth Asian economies*. "The private equity market, in particular, is well-placed to capitalise on growth within the region due to its longer term investment horizon and ability to cope with some volatility in the growth trajectory," continued Silvina Aldeco-Martinez.

Also of note, the healthcare sector saw the largest volume of capital invested in Q1 2014, at an aggregate €56.8bn. Analysis by S&P Capital IQ shows that multiples within the healthcare industry have been trending upwards since 2011/12, with average implied enterprise value/EBITDA and implied equity value/LTM net income multiples at record post-crisis highs.

"The data suggests that the healthcare sector is heating up as multiples reach close to pre-crisis highs and deal counts begin to creep upwards in certain sub-sectors. With indications of potentially significant funds waiting for the appropriate opportunities in the traditional European healthcare industries, according to S&P Capital IQ data, this is unlikely to change in the short term," highlighted Paul Bishop, Senior Research Assistant at S&P Capital IQ. "However, the question for this industry remains whether enough high value opportunities are currently available to support this trajectory over the long term."

The latest EMEA Private Equity Market Snapshot also shows that as a destination hub for global private equity firms, the EMEA region seems to have lost some of the appeal it held last year.

"Aggregate deal volume in the EMEA PE market fell to €20.5bn (January-April 2014) from €29.5bn (January-April 2013), a drop of 30%," continued Silvina Aldeco-Martinez. "However, deal counts have shown greater resistance to any downward pressure, declining by only 6% to 1279 new entries in 2014 from the same period in 2013. In terms of exits, there was a more moderate decline of 4.7% in aggregate deal volume, and 8% in deal counts."

In each edition of EMEA Private Equity Market Snapshot, S&P Capital IQ provides in-depth analysis of the market and highlights some of the latest emerging trends. In the appendix of each issue is a data pack which provides a top-down view of the market compared to its position at the same point in time last year. Included in the data pack are charts showing transaction numbers and volumes among EMEA-based PE and venture capital (VC) targets, transaction volumes and deal counts undertaken by EMEA-based PE firms and VCs, and sector-level multiples for private equity and the region's broader merger and acquisition market.

*Source: Standard & Poor's Ratings Services Webcast: An Update on Sub-Saharan Africa Sovereign Ratings, 7 May 2014. Available at:


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Eleanor Childs
S&P Capital IQ Communications
+44 (0)20 7176 6754