Nieuws

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8 Feb 2012

Cautious Acquisition Finance Market bids to stimulate recovery in 2012

Persbericht

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New research by DLA Piper, which polled a wide range of the most influential participants in the European acquisition debt market, has revealed that the mood remains cautious but optimistic notwithstanding the downturn that hit the markets in the second half of 2011.

DLA Piper's third annual European Acquisition Finance Debt Report has shown that as a result of the Eurozone debt crisis, increased regulatory constraints and a greater focus on risk, liquidity in the markets continues to remain restricted with 80 per cent of respondents acknowledging that liquidity will never return to pre-September 2007 levels.

Expected changes to capital structures in 2012 mirror the economic influence of recent volatile market conditions observed in 2011. The survey found that the minimum for equity contributions in a transaction is increasingly likely to be at least 50 per cent of the capital required (from 12 per cent of respondents in 2011 to 37 per cent in 2012).

The results of the survey show that there is an expectation that business and professional services (19.3 per cent), healthcare (15.5 per cent), TMT (13.2 per cent), manufacturing (13 per cent) and energy and natural resources (11.4 per cent) will be the sectors with the greatest amount of acquisition debt funding activity.

Refinancing is anticipated to be the most prevalent deal type this year, according to 29 per cent of respondents, reflecting a continued focus on the "wall of refinance" due to mature in the next couple of years. Secondary and Tertiary buyouts, where private equity houses can "churn" quality assets, takes second place (down from 42 per cent in 2011 to 26 per cent in 2012), and corporate disposals are ranked the third most likely deal type at 14.3 per cent.

The research revealed that the challenges facing banks are steering the market toward alternative funding sources. Respondents believe that the traditional dominance of banks in the Senior debt market will be diluted by an increase in activity from hedge funds (from 7 per cent in 2011 to 25 per cent in 2012) and other alternative funding sources.

As in 2011, this year's respondents believe that the UK (52.3 per cent) will be the most active jurisdiction by volume followed by deals outside Europe where anticipated activity has increased from 23 per cent in the 2011 survey to 29 per cent in 2012. Interestingly, and perhaps a reflection of the large number of French deals done in 2011, Germany has increased from 7.2 per cent in 2011 to 13.1 in 2012, and France has dropped from 9.6 per cent to 3.6 per cent 2012.

Philip Butler, Head of Debt Finance at DLA Piper, London, commented: "it is clear that 2011 did not go to plan as a result of the various knock-on effects of the Eurozone crisis occurring at just the wrong time for the fragile debt and capital markets. The results of our survey show that these underlying concerns will still be relevant in 2012."

"However, whilst acknowledging these limitations, it is also true to say that the same factors that drove deal activity in 2011 will remain prominent in 2012 and the survey results suggest that the appetite is still there, albeit with a more determined focus on the 'right' deal. The economic rationale to consolidate will only intensify in the coming years and this, together with the need for the refinancing wall to be addressed and private equity houses needing to exit investments and raise new funds, will continue to drive opportunities for growth in 2012."

Further information on the reoprt can be found here.