European private equity deal value and volume hit a record in the first quarter of 2021, boosted by middle-market and microcap deals.
A report by PitchBook Data shows that general partners closed on 1,936 deals totaling €158.8 billion ($186.4 billion) in the quarter, up 79.9% and 28.5%, respectively, vs. the first quarter of 2020. Fourth-quarter data were not available. General partners closed over 1,200 transactions in the fourth quarter.
Many of the strong private equity tailwinds seen in the third and fourth quarters of 2020 have either been maintained or extended, including liquid credit markets, historically high public market valuations, continued low interest rates and public market volatility, PitchBook said.
In the first quarter of the year, 70.9% of buyouts were bolt-on acquisitions of companies in similar industries.
With extremely liquid credit markets and record levels of private equity dry powder, managers see bolt-ons as the predominant path to growth, PitchBook said.
European private equity exit activity also had an exceptional start to 2021, with the first quarter's exit value reaching a total of €115.5 billion, PitchBook said. In the first quarter of 2020, general partners exited companies with a total value of €35.7 billion, according to PitchBook data from April 22, 2020.
European private equity-backed initial public offerings saw blistering activity in the first quarter, recording over €30 billion in IPO exit value as public equity investors were willing to pay premiums for growth assets, PitchBook said. Comparative data were not available.
Compared to deals and exits, fundraising activity was slower in the first quarter, PitchBook said.
Fundraising volumes in the quarter stood at €22.1 billion, compared with €10.9 billion in the first quarter of 2020, PitchBook's data published one year ago said.
PitchBook expects to see an increase in the pace of fundraising through the remainder of the year due to a number of open large funds in the market.
More than half of the capital raised in the first quarter came from Apax X, a private equity fund focused on the technology, health-care, consumer and services sectors, managed by Apax Partners. The fund closed in January at €11.8 billion.