The uncertainty and disruption stemming from the COVID-19 pandemic continue to have a significant impact on European private equity markets. The number of private equity transactions involving European targets announced since 15 June was down 48.1%, compared to the 2017-2019 average for the same period. This drop is largely in line with the decrease seen during the first three months of the pandemic.

There are bright spots, however. Against this tough background, the technology sector is seeing unusually high private equity activity. By value, 48.7% of all private equity transactions announced since 15 June involved technology targets, compared to an average of 30.8% during the same period in 2017-2019. In contrast, activity in the healthcare and pharma sectors is more modest than expected, making up 6.6% of announced transactions by value since 15 June, compared to an average of 14.2% during the same period of 2017-2019. There are, however, signs that healthcare investment will rebound in the coming months.

Deal 1 – Industrial & Financial Systems (IFS)

£2.72 billion

Date Announced: 14/07/2020
Buyer: EQT Partners, TA Associates
Seller: EQT Partners (VII Fund)
Deal Type: Secondary Buyout

In 2015, EQT Partners' VII Fund acquired a majority stake in enterprise software company IFS, which was then listed on Nasdaq Stockholm. EQT acquired the remainder of the company's shares the following year and delisted IFS. Since the investment, IFS has made a number of bolt-on acquisitions, doubling revenues and quadrupling EBITDA in the process. TA Associates will hold a significant minority stake in IFS following completion of the transaction, while EQT's VIII and IX funds will hold the majority, underlining the firm's continued belief in the Swedish software group. Even though many of IFS' customers are consumer-facing, technological and operational efficiency remains a priority for such businesses even during market turbulence.

Deal 2 – Roompot Vakanties

£899.7 million

Date Announced: 18/06/2020
Buyer: Kohlberg Kravis Roberts & Co.
Seller: PAI Partners
Deal Type: Secondary Buyout

KKR has agreed to acquire the Dutch holiday park operator Roompot Group from PAI Partners. Roompot Group has campsites and holiday homes in Belgium, Denmark, France, Germany, the Netherlands and Spain. It was put up for sale earlier this year, but the process was paused in March. The successful resumption of the sale is welcome proof of the market's continued appetite for good assets, despite the challenges. The acquisition of a holiday park operator suggests that the leisure industry is looking for opportunities to cater for holidaymakers obliged to stay closer to home as a result of travel restrictions and adjusting to consumers' tendency to trade down to more affordable options during recessions.

Deal 3 - Infrastrutture Wireless Italiane

£1.22 billion

Date Announced: 24/06/2020
Buyer: A private equity consortium led by Ardian
Seller: Telecom Italia
Deal Type: Minority Investment

The Ardian-led consortium will invest in a newly formed holding company into which a 30.2% stake in telecoms towers operator INWIT will be transferred by Gruppo TIM (Telecom Italia). The Ardian group will take a 49% stake in the new holding company, with another vehicle managed by Canson Capital Partners taking a 3% in INWIT from TIM. Following completion, TIM will retain full and exclusive control of the new holding company and continue to exercise joint control over INWIT together with Vodafone Europe, which merged its towers into INWIT in March. As Italy's largest towers group, INWIT is in a strong position to benefit as Italy rolls out its 5G network.

Deal 4 – Viesgo Espana

£2.45 billion

Date Announced: 15/07/2020
Buyer: Energias de Portugal, Macquarie Group (Super Core Infrastructure Fund)
Seller: Macquarie Group (European Infrastructure Fund IV)
Deal Type: Secondary Buyout

Under the terms of the transaction, Macquarie Group will sell a large majority stake in Spanish electricity group Viesgo to Energias de Portugal (EDP), and also sell Viesgo's renewable energy generation business to the renewables arm of EDP. At the same time, EDP will incorporate its Spanish electricity distribution networks into Viesgo, making it a leading electricity distribution platform in northern Spain. Following the deal, Macquarie will own a 24.9% stake in Viesgo, focusing its investment on regulated electricity networks. The transaction was made possible by Macquarie's buyout of a 40% stake in Viesgo from its partner Wren House Infrastructure Management in May. It highlights continued strong private equity investment activity in European infrastructure assets that continue to require ongoing investment for expansion and improvement.

Deal 5 – Silaexpert

£539.3 million

Date Announced: 08/07/2020
Buyer: Silver Lake Partners
Seller: Founders of Silaexpert
Deal Type: Acquisition

Technology-focused private equity firm Silver Lake agreed to acquire French payroll and HR software business Silaexpert (Silae) from the company's founders. Silver Lake aims to support Silae with investment for new product launches to expand its software offering for companies. Silae already works with some 550,000 businesses in France and is on track to process pay slips from some 4 million French employees on its software solutions in 2020. This transaction is another example of significant private equity interest in the technology sector, and Software as a Service (SaaS) companies in particular. We expect this interest to persist, given the ongoing need for technological innovation that has only increased because of the COVID-19 pandemic.

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