European private equity deal making got off to a strong start in the first quarter of 2017, despite political uncertainty, according to research.
PitchBook’s Q1 2017 ‘European PE Breakdown Report’ showed that the value of private equity investments in the first quarter totaled €82.5 billion, slightly below the €89.8 billion recorded during the same quarter last year.
As financial sponsors continue to stockpile large sums of cash ready to make deals, they’ll be forced to deploy that capital, which could fuel dealmaking activity in the coming quarters, Pitchbook said.
European private equity investors are increasingly seeking opportunities in the tech sector. In the first quarter, IT deals made up nearly 20% of completed deals in Europe, the highest proportion ever recorded by PitchBook.
Software-as-a-service (Saas) is a driver. “Tech investments have become a more attractive investment opportunity for private equity firms” said Dylan Cox, analyst at PitchBook. “The recurring revenue stream of a SaaS business often resembles that of more traditional [private equity] targets.”
He also said another driver was the development of an “entire financial ecosystem” specialising in IT, including investors, lenders, diligence firms and other service providers.
After reaching a post-financial-crisis high last year, European fundraising is likely to remain strong in 2017. In the first quarter, €18.7 billion was raised across 30 funds. Of the funds closed during the quarter, 91% hit their targets, the highest level recorded by PitchBook.
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