What proportion of transactions have involved a financial sponsor as a buyer or seller in the jurisdiction over the last 24 months?
Transactions by financial investors remained the exception in 2017, with strategic investors accounting for 94% of all transactions according to the EY M&A-Index Austria 2017. Such high ratio comes as a surprise though since the interest of financial sponsors in the Austrian market is steadily increasing.
While private equity activity remained robust throughout the last 24 months, there were only a handful of completed larger buyouts, with the by far most prominent deal being the acquisition of Austria based Schweighofer Fiber by TowerBrook Capital Partners with a reported deal value north of 500 million Euros, followed by the acquisition of chemical manufacturer Esim Chemicals by Sun European Partners from Ardian with a reported deal value of almost 400 million Euros, the acquisition of CCC Holding GmbH by Ardian from Silverfleet Capital Partners and the acquisition of Vienna based software house Tricentis by Insight Ventures from Kenneth Partners with a reported deal value of Euro 154 million. In another high profile transaction, Capvis acquired a majority interest in Amann Girrbach, a leading full-service provider in digital dental prosthetics (transaction volume confidential). PE investments in the mid-market segment (comprising deals with values between 10 million and 100 million Euros) dropped compared to previous years as well with the drop, however, being less pronounced than at the top end. Examples mid-market deals include the control investment in Austria based inet-logistics GmbH by Castik Capital S.a.r.l., the acquisition of a majority stake in VSE listed Wiener Privatbank by Arca Capital, the acquisition of a majority interest in publicly listed lingerie company Wolford AG by Chinese financial investor Fosun (with a proposed bid by OpCapita), the acquisition of Leibnitz-based online car trading platform gebrauchtwagen.at by private equity-backed Scout 24 group, the acquisition of majority stake in Austria based ABC Marketing GmbH by Swiss Investnet AG, the acquisition of optical measurement systems producer Nextsense by Hexagon, the acquisition of payroll solution service provider Infoniqa by Elvaston from Cornerstone and the acquisition of a majority interest in pant engineer VTU group by DPE Deutsche Private Equity. In the growth capital segment, the most notable transactions were the investment by Germany based Hannover Finanz in Sportnahrung Mitteregger, the investment of Trumpf Venture in Vienna based tech company Xarion Laser Acoustics and the investment of IMCap Partners in software company Intact. In the distressed segment, financial investor GA Europe acquired the insolvent fashion retailer Charles Vögele. Interest of property funds remained stable. Closed transactions include Corestate Capital’s forward purchase of the third Vienna Triiiple tower or Accelerate Property’s acquisition of a portfolio of specialist DIY retail centres.
PE exits outnumbered PE investments. The vast majority of those exits were to strategic investors. However, the three biggest exits (i.e. the sales of CCC Holding GmbH, Esim Chemicals and Tricentis (already reported on above)) were to PE. Examples of exits to strategic investors include the sale of POOL4TOOL AG by aws-mittelstandsfond to US Jaggaer, the sale of mySugr GmbH by Roche Venture Fund, Austria Wirtschaftsservice, XLHEALTH AG and iSeed Ventures to Roche Holding AG, the sale of M&R Automation GmbH by Quadriga Capital to PIA Automation Holding GmbH, the sale of mechatonic Systemtechnik GmbH by FIDURA Private Equity and Danube Equity to Accuron Technologies Limited, the sale of Prescreen GmbH by Kizoo Technology Ventures to XING AG and the sale of nxtControl GmbH by TecNet Equity to Schneider Electric SA.
At the top end, there was no particular trend as deals were spread across different sectors. In the mid-market, on the other hand, technology and industrial products and services accounted for most of the deal flow and that trend is expected to continue. Real estate overall remained very hot with PE playing a lesser role, however. A not able deal was the acquisition of a pan-European portfolio, including the Vienna Florido tower by Ares from Amundi.
Transactions involving financial sponsors as a buyer or seller in 2016 and 2017 represented between 35 and 40 percent of the total number of transactions. This reflects a positive trend of the relative number of deals involving private equity, which is mainly driven by an increasing number of secondary buy-outs and private equity exits. The number of first-time institutional buy-outs on the Belgian market remained stable during this period. We have not seen a significant departure from this trend during the first part of 2018.
From August 1, 2016 to August 31, 2018, there were 6,904 M&A transactions in which the targets were Japanese companies. Financial sponsors were buyers in approximately 18% of such transactions, and were sellers in approximately 2% of them (Source: RECOF).
There are no public figures available in Mauritius on this particular point. However, we regularly see financial sponsors involved in private equity transactions and considering the statistics on licensing of funds in Mauritius over the past years, it is expected that the need for financial sponsors will be on the rise in view of the increasing demand for Indian and African assets.
The Norwegian transaction market has in recent years attracted high interest from Norwegian, Nordic and international financial sponsors (private equity firms). According to available market data, approximately 20% of transactions in the Norwegian market during the last 24 months have involved a financial sponsor as a buyer or seller. This figure does not include add-on acquisitions or divestments made by portfolio companies of financial sponsors. If such transactions are added to the overall figure, the proportion of transactions involving financial sponsors would be significantly higher.
In Switzerland, private equity investors remain very active on the market and were involved in 36 per cent of all transactions amounting to 50 recorded deals in the first half of 2018 (compared to 28 per cent in the first half 2017). The involvement of financial sponsors in Switzerland has increased over the last 24 months as the ongoing environment with (still) low interest rates and generous borrowing conditions continues to facilitate the funding of possible acquisitions and puts pressure on financial sponsors to invest. In addition, Switzerland remains very attractive for financial sponsors with interesting investment opportunities (notably small- and medium-sized enterprises which will need to deal with succession planning in the coming years) and no (or very little) investment restrictions.
Based on publicly available sources the total deal volume relating to Dutch targets over the past 24 month’ period was approximately 1050 deals. Transactions involving financial sponsors as a buyer or seller in 2016 and 2017 represented approximately 40 percent of this total number of transactions.
There’s been a strong and consistent deal flow in the past few years involving financial sponsors. Based on BVCA data (the UK’s private equity industry the value of private equity investments annually since 2016 has consistently remained between £21.5 and £22.5 billion.
Financial sponsors have continued to remain active in the China M&A market in the past few years. According to PwC M&A 2017 Review, the value of private equity and VC investments in China in 2016 and 2017 was US$224.8 billion (in 5,259 deals) and US$182.9 billion (in 3,662 deals) respectively, representing 40.21% and 32.04%, respectively, of the total value invested in China in these years, and the number of inbound deals in China sponsored by financial investors in 2016 and 2017 represented 50.57% and 40.56%, respectively, of the total number of inbound deals in these years.
PwC M&A 2018 Mid-year Review also indicated that in the first half of 2018, the number of deals by financial sponsors in China was 2,465 (with an aggregate amount invested of US$93.9 billion), representing a 32% increase from the deal volume in the first half of 2017 (i.e. 1,868) and constituting 45.86% of the total number of all inbound deals made by both strategic and financial investors, and 31.17% of the total value invested in China, during the first half of 2018.
There has been a general uptick in private equity activity in Finland over the last 24 months, a trend we expect to continue. According to recent deal data, some 30% of Finnish M&A transactions with a deal value exceeding USD 5 million involved a financial sponsor as either buyer or seller. Moreover, statistics by the Finnish Venture Capital Association indicate that fundraising of Finnish buyout funds reached their highest level since 2008. This increase in fundraising, coupled with strong international private equity interest in the Finnish market, supports the growth outlook for private equity activity in Finland.
For the past 24 months, the private equity market in France has sustained a high level of activity. Since 2016, PE transactions represented an average of 44.1% of French M&A deals (40.8% in 2017 and 47.3% in 2016). Despite a slightly decline in the numbers of deals, we noted a significant increase in the values of the transactions. The government’s efforts to reform the country is likely to maintain this favorable climate.
Based on recent public data, the value of private equity sponsored investments in Germany increased from EUR 21.1 billion (July 2016 to June 2017) to EUR 24.7 billion (July 2017 to June 2018). In the first half year 2018, the number of private equity sponsored deals remained stable amounting to 96 compared to 97 in the first half year 2017 whereby the transaction value significantly rose in the same time period from a total value of EUR 5.3 billion (first half year 2017) to a total value of EUR 10.7 billion (first half year 2018).
Given the overall amount of 314 published M&A transactions in the first half year 2018 in Germany, of which 96 transactions involved a PE sponsor as buyer or seller, approximately 30 % of all published M&A transactions in Germany involved financial sponsors.
Out of a total of approximately €1,2bn worth of M&A transactions during 2017, it is roughly estimated that a 15% involved financial sponsors as buyers or sellers.
We have seen a significant increase in sponsor led M&A with some statistics showing up to 60% of deals involving private equity purchasers.
Transactions involving financial sponsors as a buyer or seller in 2017 and 2018 represented a large proportion of the total transactions – estimated to be between 60 and 70 percent of the total number of transactions. This reflects a positive trend of the relative number of deals involving private equity, primarily driven by the strong presence of private equity firms active in the jurisdiction.
The Russian merger control rules are set forth in the Russian federal law "On the Protec-tion of Competition" (the "Competition Law"). Since its coming into force in 2006, the Competition Law has been amended repeatedly. The latest significant amendments of the Competition Law in the area of merger control were enacted in 2016 (the so-called "fourth antimonopoly package"), introducing mandatory filings for the approval of joint venture agreements between competitors. The Competition Law provides for basic mer-ger control rules that apply to any industry or market and to various types of transactions involving Russian entities or assets or foreign entities that conduct business in or with Russia.
The relevant enforcement agency is the Federal Antimonopoly Service ("FAS") with a cen-tral office in Moscow and territorial offices throughout the Russian regions. There are cer-tain internal rules at FAS regulating the allocation of tasks and merger control applications between the central and the territorial offices. The FAS is internally subdivided into a number of specialised divisions, whereby each division covers a particular industry or eco-nomic sector.
The FAS is also the competent authority for handling filings under Russian laws on foreign investments. While the foreign investment laws are a set of regulations separate from the merger control rules, they can have a procedural impact on merger clearance and should always be considered in case of a foreign, or foreign-held, entity involved in the transac-tion.
Private equity and venture capital funds have been extremely active in 2017.
According to M&A Index Poland, private equity entities comprised 17% of buyers and 13% of sellers in 2017.
Private equity funds act as sponsors in transactions in a wide variety of industries.
The acquisition of Żabka retail chain by CVC Capital Partners was one of the most significant transactions in 2017 amounting to PLN 4.3 billion.
Funds are also active in a wide variety of industries including financial services, energy, real estate and food production.
In the first quarter of 2018 private equity funds represented 17% of the buying parties and 13% of the selling parties.
Full data is not yet available for the second quarter of 2018 for private equity funds entities as buying parties, but they constituted 7% of selling parties.
No official public data is available regarding the relevance of transactions which featured financial sponsors within the overall Portuguese M&A landscape, either as buyers or sellers.
In absolute numbers, however, it can be ascertained that the volume of private equity transactions (both buy-side and sell-side) in Portugal have on average steadily increased since the peak of the Eurozone crisis, at the end of 2011 (source: Portuguese Securities Market Commission, the “CMVM”, annual report on private equity, 2017).
Financial sponsors are very active in Sweden which has been the case for many years. Our statistics show that the involvement of financial sponsors has been steady for the past two years and they were involved in approximately 30% of all transactions. Comparing 2016 and 2017, the number of buy-outs and exits slightly decreased in 2017. At the same time however, the deal value significantly increased.
Of the private target M&A transactions in the US for which Kirkland has been involved in the last 12 months, approximately: (i) 63% of such transactions involved a financial sponsor as buyer from, or seller to, a non-financial sponsor entity; (ii) 18% involved a sale from a financial sponsor to a financial sponsor and (iii) 19% did not include a financial sponsor buyer or seller. From Bloomberg sources, in the last 12 months, approximately 6,300 transactions with aggregate deal value of $430 billion have included a financial sponsor as either buyer or seller, which represents approximately 41% of all US M&A transactions by volume and 47% by value.
There are no official statistics issued by any Maltese authority in respect of merger and acquisition transaction or private equity transactions taking place in Malta or involving Maltese companies. However, much of the merger and acquisition activity that we deal with tend to be strategic transactions intended to increase market share or expand into a new service/ product offering. Transactions involving a financial sponsor are less frequent in Malta. We attribute this primarily to the fact that the Maltese market is a very small market composed of a population of less than half a million.
Over the past 24 months, the most notable transactions in Malta involving financial sponsors as buyers or seller were in the banking, telecommunications and financial services sectors.
Investments by financial sponsors have been a consistent alternate source of investments in Indian markets. Potential growth opportunities coupled with several Government initiatives, such as, Skill India, Make in India and others have opened up additional investment avenues for funds. Private Equity firms invested $23.8 billion in 2017 making it the biggest year for private equity investments in India. The investment value is 39% higher than the previous high of $17.1 billion (recorded in 2015) and 55% higher than the $15.4 billion invested during 2016 (Source: India Private Equity Trend Report 2018 from Venture Intelligence).