Top private equity targets 2010: business support,
infrastructure and logistics - survey
58% of private equity firms expect to change their investment
strategy by focussing on at least one new sector in 2010, according
to
Grant Thornton's Private Equity Barometer. The quarterly survey
of more than 100 private equity executives suggests that the sector
group comprising business support, infrastructure and logistics
business will continue to be the most popular choices among private
equity firms, with 51% of respondents choosing it as one of the
most active sectors in 2010. At the same time, only 42% of
respondents said that they had been most active in business support
in the previous twelve months.
"Private equity firms are increasingly choosing to invest in
sectors that lend themselves to a more obvious exit via trade sale.
Moreover, acquisitive private equity firms need to get various
banks to agree on club deals, which is why they favour sectors that
offer steady and predictable cash flows. Healthcare, business
support services and infrastructure are fairly safe bets,"
commented Mo Merali, Head of Private Equity at Grant Thornton.
42% of respondents did not make any changes when asked to
identify the three main sector groups in which they expect to be
most active in 2010.
The popularity of healthcare is also rising, with 47% of
respondents expecting to be most active in the sector, while only
33% said that they had been most active in healthcare last
year.
The results suggest that the sector group including industrials,
manufacturing and engineering will be the third most active sector
for private equity investments in the coming months, with almost
41% expecting it to be one of their most active sectors in 2010,
while only 29% named industrials as one of the sectors in which
they had been most active during the previous twelve months.
"Both the high technology and the consumer products sectors are
being knocked off their pedestals, with only 34% and 32% of private
equity respondents expecting to be most active in these sectors,"
commented Merali.
In 2009, the high technology sector and the sector comprising
consumer products, retail and food had been the second and third
most active sectors, with 41% of respondents saying they had been
most active in high technology, followed by 37% in the consumer
products sector.
"Our survey also shows that private equity respondents continue
to pay higher prices for healthcare and high technology firms than
for any other sector," Merali concluded.
In 2010, respondents expect EBITDA multiples to amount to 7.2
for high technology and 7.1 for healthcare. Respondents suggested
that in 2009, they paid average EBITDA multiples of 7.0 and 6.8
respectively for high technology and healthcare assets. In spite of
recent reports of a £955 million private equity bid for Pets at
Home, valuations for the sector comprising consumer products,
retail and food were expected to remain relatively low in 2010 with
an EBITDA multiples of 5.5.
For further information please contact:
Alexander Wessendorff, Grant Thornton press office, 020 7728
2048