Record value for private equity-backed buyouts in the West Midlands

The value of private equity-backed deals in the West Midlands hit record values in 2021, according to provisional data from CMBOR, the Centre for Private Equity and MBO Research.

Total deal value for the region stood at £4.7 billion in the year, fuelled by two significant deals in the second half of the year. It is the highest headline deal value in the West Midlands since records began in 1986.

Sixteen deals were recorded in 2021 – up by ten on the previous year as a continuation of the recovery which emerged in the final quarter of 2020 – according to the data in CMBOR’s first full-year announcement since its re-establishment within Nottingham University Business School with the support of Equistone Partners Europe.

Of the West Midlands’ deals in the second half of the year, two dominated the scene. Temporary power company Aggreko delisted from the London Stock Exchange following its £2.3 billion acquisition by private equity firms TDR Capital and I Squared Capital, whilst warehouse and house builder St Modwen was secured in a deal valued at nearly £1.7 billion by Blackstone.

Although not achieving the same level of value, it was a similar picture in the East Midlands with 13 deals recorded in the year with a combined value of £989m – up from £152m in 2020 and the highest recorded in the region since 2015 (£1.56bn).

CMBOR’s year-end report also showed that private equity activity across the whole of the UK reached levels not seen since before the global financial crisis. At £45.8bn, the cumulative value of the 235 buyouts of UK-based companies in 2021 represented the biggest headline figure in the 35-year history of CMBOR, surpassed on an inflation-adjusted basis only by the £44.1bn recorded in 2007.

Will Copeland, from Equistone’s Midlands office in Birmingham, said: “The second half of 2021 in the West Midlands continued to be as buoyant as the first with plenty of investment capital available.

“Although the West Midlands’ figures are skewed by two landmark deals, excluding those reveals that total deal value in the region was above the average for recent years.  Sector-focus of private equity investment has predominantly been in business services and technology companies,” said Copeland.

“For the year ahead, there are several interesting opportunities emerging in the Midlands, both from a platform investment and bolt-on investment perspective.  There is some anticipation that the latter may arise from more distressed situations.

“Meanwhile, we will continue to focus not only on finding new investment opportunities but also on realising value for our investors. I suspect we’re not the only general partner in this segment that has returned more capital to investors than we’ve invested in 2021,” he said.

Across the UK, record levels of capital deployment were accompanied by strong exit activity, as private equity firms realised 124 investments in the UK at an aggregate value of £27.9 billion – the largest such figures since 2018 and 2017, respectively. Floatations were a significant contributor, accounting for the largest single exit (Blackstone and CVC’s relisting of Paysafe via sale to a Special Purpose Acquisition Company) and reaching their highest volume since 2017 and cumulative value since 2015.

These seven UK listings, totalling £11.3 billion, showed private equity firms also steering investee companies back towards public markets following a successful hold period.