The value of dealmaking in Western Europe dropped 85% year on year in November as the eurozone debt crisis slashes the number and value and number of private equity deals, according to M&A database Zephyr.
The eurozone debt crisis is beginning to have a profound effect on deal activity, particularly private equity, Zephyr said in a statement.
European dealmaking as a whole numbered 1,000 transactions worth a combined 39.31 billion, Zephyr says. Italian, Spanish and Portuguese banks are scrambling to raise funds to strengthen their balance sheets, Zephyr says, the trickle-down effect of which has resulted in deals worth just 1.62 billion in Western Europe in November, compared to the 10.96 billion recorded in November 2010.
Italian deals surpasses deals in the UK on the back of a 7.50 billion rights issue by UniCredit. Italy as a whole chalked up deals worth 8.55 billion, compared to the UKs 6.67 billion.
Banks were the greatest investment target in terms of deal value, Zephyr says, with 15.83 billion worth of transactions in that sector. That is double the 6.87 billion recorded in the sector over October, and a 12% increase over November 2010. The gain points to European banks raising funds to restore confidence in their financial flexibility, Zephyr says. mong the top 20 deals by value there were five such deals worth a combined 13,362 million equivalent to more than a third of total deal value in November. The targets of these deals are using convertible bonds and loans, rights issues and converted debt to improve their capital structure.
(CG)