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Buyout values up in first quarter.

TAKEOVERS such as the pounds 950m swoop for retailer Pets at Home pushed the value of UK private equity buyouts to a two-year high in the first quarter of 2010, new figures show.

The total value of private-equity backed deals reached pounds 5bn in the first quarter, helped by the buyout of the Cheshire-based chain as well as medical courier Marken, said the Centre for Management Buyout Research (CMBOR).

The value of business done in the opening months of 2010 already exceeds the pounds 4.7bn seen for the whole of last year and is at its highest since the first quarter of 2008 before the recession began, CMBOR added. Private equity firms benefited from a glut of cheap debt during the boom years - taking over a raft of household names including the AA and Boots - but the onset of the credit crunch in late 2007 put an end to the buyout boom.

Barclays Private Equity director Christiian Marriott said the upturn signalled a "renewed appetite" among private equity firms to spend, helped by better lending conditions and visibility on earnings.

But activity nonetheless remains well below the pounds 20.4bn in deals seen at the peak in the second quarter of 2007 and Mr Marriott ruled out a swift return to the heady days of the buyout binge. He said: "The strong start to the year may not necessarily signal a sustained resurgence in the UK buyout market, rather a more gradual recovery over the next few years as confidence returns to the market."

The Pets at Home and Marken deals accounted for 40% of the buyouts by value during the first three months of the year, and pushed up the average size of buyouts to pounds 116.7m from pounds 39.5m during 2009.

There were 43 buyouts in total during the quarter, up 72% from the final three months of 2009. Of the 12 deals valued at more than pounds 100m, eight were secondary deals where a company was sold from one buyout firm to another.
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Publication:The Journal (Newcastle, England)
Date:Apr 20, 2010
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