Private equity groups’ appetite for company buyouts has waned in 2011 after a buoyant period at the end of last year, according to new research. The value of UK private equity buy-outs so far in 2011 is £5.7bn, just 30% of the figure for the whole of 2010. The three months to June was less active than the start of the year, with 59 buyouts recorded with a total value of £2.3bn, compared to 106 deals with a total value of £3.6bn in Q1. Meanwhile, the UK exit market has performed well in H1 2011 - the total value of exits completed during the period was £5.8bn, overtaking the level of investments (£5.7bn) for the first time since 2006. The research is from the Centre for Management Buyout Research and was sponsored by Barclays Private Equity and Ernst & Young. Secondary transactions, including Duke Street’s c.£215m the buyout of Wagamama, continue to dominate the UK buyout market, the research found. Secondary buyouts accounted for 51% of transactions in Q1 and 57% of transactions in Q2 2011. In 2010, secondary transactions accounted for 50% of all buyouts in Q4 and 46% for the whole year. The mid-market deals (those valued at £100m to £500m) slowed significantly in H1 2011, falling to seven from 33 in H1 2010, For deals in the £250m-£500m range, the total value fell by 57% from £1.9bn for five deals in H2 2010 to £836m for just two deals so far this year. Christiian Marriott, director at Barclays Private Equity, predicted a “subdued” buyout market for the rest of 2011. He said: “The UK private equity market has had a slow start to 2011 following a heightened level of buyout activity at the end of 2010. “Buyout firms in general have been more motivated to sell than acquire, and the exit market has dominated UK deal flow in the first half of this year with a number of large transactions due to complete during Q3/Q4. “While there are a few large buyouts in the pipeline, it is very possible that buyout activity in the second half of this year will remain subdued. If this proves to be the case the UK buyout market will be operating at a level last seen in the late 1990s, but with much more committed capital waiting to be invested. “So while the buyout market has already exceeded 2009’s full year activity and is certainly recovering, it is clear that sentiment in the industry remains cautious particularly around asset pricing and competition from both private equity houses and an emerging stream of trade buyers.”

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