Private equity deals in region hit £1.8bn

PRIVATE equity deals in Yorkshire and the Humber amounted to £1.8bn in 2010, according to the Centre for Management Buy-out Research.

The data shows there were 164 UK private equity backed buy-outs in 2010, with an overall value of 18.2bn. That compares with a total number of 122 in 2009, with a value of 4.7bn.

Yorkshire and the Humber accounted for 14 of the 164 deals, worth 1.8bn, compared with 15 in the previous year valued at 200m.

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The number of private equity backed buy-outs in the region has slumped from a peak in 2007 of 35 deals, worth 3.4bn.

David Buckley, transactions partner at professional services group Ernst & Young in Leeds, which sponsors the research, said: "Confidence is gradually returning to the UK buy-out market.

"Very few large deals grab the headlines, but it is key for a regional market like Yorkshire and the Humber to note that overall volumes and values are up in 2010 and 75 per cent of all UK deals are sub-100m."

Barclays Private Equity director Christian Marriott said: "There has been a strong recovery in deals in the over 500m size range but we have yet to see the return of the mega-buy-out due to continuing restrictions on the availability of debt and fewer investment opportunities at this end of the market."

There were 40 private equity backed buy-outs in 2010 in the UK, with a value of over 100m, raising 16bn, 88 per cent of the total value overall.

The average deal structure in 2010 was 68 per cent equity and 32 per cent debt (including mezzanine, loan notes and other finance). This is the highest ever percentage of equity.

Mr Buckley said: "This change in deal structure is unsurprising given the fact that banks would only lend up to a point, resulting in increased equity contribution by private equity firms.

"Additionally, with the debt markets still lagging behind the increasing deal activity, this trend is likely to continue in 2011."

Manufacturing was the largest sector by value in 2010, with a combined value of 5bn, including the 2.9bn public-to-private deal of Tomkins.

The volume of buy-outs in the manufacturing sector was 31 compared with 26 in 2009, down from 69 in 2008.

Business services was the most active sector in 2010 by volume, with 37 buy-outs compared with 22 deals in 2009.

The number of financial services transactions in 2010 was 11, totalling 2.8bn. This compares with last year's 12 deals, raising a total of 500m.

Mr Marriott said: "Buy-out levels in the manufacturing sector has shown strong growth following a very quiet 2009."