In what was a record year for UK management buy-outs, £25bn in deals were
completed in 2005 – a trend that is set to continue into 2006.
Research by KPMG’s private equity group, which tracks deals in excess of
£10m, found that 162 larger buy-outs worth £24.9bn were completed, a 27% value
increase on the 154 deals worth £19.6bn in 2004.
Mick McDonagh, KPMG corporate finance partner, said similar levels could be
reached in 2006.
‘All the things that drove the market (in 2005) are still there going into
2006,’ said McDonagh. ‘There is still an awful lot of money out there to invest
and the debt markets are still strong. The market is set fair.’
McDonagh said that in 2005, private equity groups had raised record amounts
of equity from institutions and that debt markets were highly liquid, which gave
private equity even more firepower.
The strong appetite for listings and a booming merger and acquisition market
had also boosted deal activity as buy-out firms had viable exits from their
The biggest deals in 2005 all exceeded £1bn. Bookmaker Coral Eurobet bough
Gala for £2.18bn; Warner Chilcott, the pharmaceuticals group was taken private
for £1.67bn by a consortium led by JPMorgan and Credit Suisse First Boston, and
Apax Partners, Barclays Capital and Robert Tchenguiz bought Somerfield for
In other billion-pound deals, entrepreneur Hugh Osmond bought HHG’s closed
life assurance for £1.07bn, while foreign exchange group Travelex was sold to
Apax for £1.06bn.
‘There are very few companies out there that are beyond the reach of private
equity because they can club together and do some large transactions,’ said
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