Wave of dealmaking sees 123 UK firms taken over by private equity during pandemic
The pandemic has acted as a catalyst for a wave of private equity takeovers of UK firms, with their value reaching their highest level since the financial crisis.
While coronavirus initially triggered a slowdown in dealmaking, private equity houses gained momentum by the autumn with a string of high-profile and high-value deals.
Some 123 UK companies, including household names Asda, AA and Butlin’s owner Bourne Group, worth £36bn have been taken private since the outbreak of coronavirus last year.
It brings the value of private equity deals since the start of the pandemic to £52.6bn, with 19 more deals worth £16.6bn in the pipeline. It marks the highest level since the financial crash 13 years ago, according to the figures shared with the Daily Mail.
The economic disruption caused by the pandemic has presented numerous opportunities for private equity firms.
Large falls in share prices of some listed companies have made them a more attractive prospect to private equity houses. The double whammy of Covid and Brexit have depressed valuations of UK shares compared to their international counterparts.
This paired with the record level of dry powder means it has been a bumper year for private equity.
One of the biggest deals of the past year was the £6.8bn acquisition of supermarket chain Asda in October last year, by the Issa brothers and TDR Capital.
A growing trend over the past year has been the rise of this so-called ‘club deal’, when two or more private equity or trade buyers jointly acquire a company.
The total value of these deals reached £19.7bn last year, a fourfold increase from the £4.5bn in 2019, according to data shared with City A.M.
Largely seen as a tactic to diversify their risk, some public deals have seen bidders who were initially competing join forces in a deal to secure the target, as was the case in the takeovers of both Signature Aviation and the AA Group.