| Private equity to boost Irish M&A market in 2007 |
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| Private equity will be a major driver of growth in the mergers & acquisitions (M&A) market in 2007. Private equity accounted for 18 per cent of all M&A activity in 2006. The increased buying power of private-equity groups, the availability of cheap debt and increasingly aggressive leverage structures' are factors behind the growth. |
In the global M&A market in 2006, private equity was a major driver behind growth, accounting for 18 per cent of all such activity.
According to Leo Casey, a director with IBI Corporate Finance, 'the increased buying power of private-equity groups, the availability of cheap debt and increasingly aggressive leverage structures' are factors behind the growth.
The trend was also evident in the Irish market, and Casey says that, 'private equity has played an increasingly important role in the Irish M&A landscape in recent years'.
Landmark private equity transactions in the Irish market in the recent past have included Doughty Hanson's €265 million acquisition of TV3 (2006), Babcock and Brown's €2 billion acquisition of eircom (2006) and Warburg Pincus' €630 million acquisition of Clondalkin Group (2004).
Casey expects private equity to continue to play a significant role in the Irish corporate finance market in 2007.
'The relative attractiveness of the Irish economy means that Ireland continues to be very much on the radar of the large London-based buyout houses. That said, the small size of the market and the relatively small number of big-ticket deals each year (such as eircom, Clondalkin and TV3) places a natural ceiling on the growth of institutional private equity involvement in the Irish market'.
However, Casey also cites the wealth created on the back of the Irish property boom as a factor which will drive private equity involvement in M&A over the next year.
'The private banking arms of the main banks, as well as dedicated private banks such as Quinlan Private, have become increasingly active in corporate transactions. In addition, a number of new funds such as Boundary Capital and Lioncourt Capital have been created which focus on private equity transactions alongside more traditional property based transactions. All of this indicates that the broad private equity community will continue to play a very important role in the Irish M&A market for the foreseeable future'.
The increasing presence of private equity firms in the Irish market is also impacting on the way deals are done. David Carson, head of M&A Transaction Services at Deloitte, says that the involvement of private equity firms in the M&A market is increasing professionalism, and referring to a recent Deloitte survey on the issue he said, 'Private equity has truly professionalised the process over recent years and is recognised for this achievement: the CFOs that were polled scored private equity capability as significantly higher than their own. Both the private equity and corporate markets are piling money into M&A, but their ability to pull it off diverges considerably.
'With this in mind, the corporate market would do well to look at and learn from the best practice exhibited by the smartest corporates and private equity houses,' he added. |
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| Article appeared in the February 2007 issue.
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