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Third Quarter Registers as the Weakest Quarter for European Private Equity Activity

Vlad Poptamas

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Photo source: PitchBook
Reading Time: 3 minutes

European Private Equity Industry Remains Healthy Overall, in spite of Downward Trend in Dealmaking, Exits and Fundraising in 3Q 2018

European private equity dealmakers have completed 2,327 deals worth a combined €276.8 billion through 3Q 2018 —14.8% and 15.3% decreases, respectively, compared to the same timeframe in 2017, according to PitchBook’s 3Q 2018 European Private Equity Report. The third quarter represents the weakest quarter in 2018 for PE activity in terms of PE deal count and value, with just 731 completed deals totaling €82.6 billion. What’s more, European PE exit activity also recorded a noteworthy dip in 2018. PE-backed exits at €2.5 billion or greater are on pace to make up the lowest proportion of total PE exit value since 2009. 3Q was also the slowest quarter for PE fundraising this year with €9.4 billion raised across 19 vehicles. Despite weak quarterly results, 2018 dealmaking is on pace for the third-best year on record and fundraising has already hit the third-highest annual level in the past decade thanks to fervent activity earlier in the year. Exit activity is also expected to pick up as GPs seek to profit from their investments.

“European PE investors experienced a banner year in 2017, reaching decade-highs in dealmaking and fundraising; therefore, while we’ve recorded significant declines in 2018 activity, the European PE market is still shaking out to be a strong year on a historical basis,” said Wylie Fernyhough, analyst at PitchBook. “The slowdowns across deal flow, exits and fundraising can be explained by several reasons including, record activity in 2017, lingering concerns over Brexit as well as the highly-priced and highly competitive market.”

Investment Activity

  • Coming off a record-setting year in 2017 in terms of PE deal value, 2018 has experienced a shortage of PE deals closing above €2.5 billion – a key contributor to diminished deal value. Only eight such deals have closed YTD, compared to 14 completed deals in the same period in 2017.
  • Despite the overall slowdown in dealmaking at the top end of the market, European PE investors continued to gravitate towards larger deals as evidenced by the 22% increase in median PE deal value (€24.4 million).
  • Additionally, EV/EBITDA multiples have risen to an all-time high at 10.0x, driven in part by the ease with which general partners (GPs) can finance deals with leveraged loans, an attractive alternative to high-yield bonds.
  • PE investors have consistently increased its share of carveout deals throughout 2018, accounting for more than 20% of all carveouts YTD – up from 14% in 2009. Private equity’s growing involvement in the broader M&A market is expected to continue as PE’s assets under management rises faster than growth in European asset value.

Exits

  • Through the first three quarters of 2018, PE firms have recorded 718 exits for a combined €150.5 billion across all exit types, down 24.3% and 30.4%, respectively, from the same period in 2017. Exit activity fell short most notably at the top end of the market (€2.5 billion+), which saw the lowest proportion of PE exits since 2009.
  • Secondary buyouts (SBOs) continued to proliferate as an exit strategy throughout 2018. YTD, SBOs accounted for 55.0% of total exit value and 52.2% of total exit count on an absolute basis —both annual records if those figures hold through 4Q. The €1.5 billion sale of North Sea Midstream Partners as well as the €1.3 billion sale of Exclusive Networks by a consortium to Permira, were the largest SBOs completed in the third quarter.
  • Europe’s exit market saw the fewest PE-backed IPOs (five) since 3Q 2012, down from 19 PE-backed IPOs in 2Q 2018, another significant factor in the overall decline in exit value.

Fundraising

  • Private equity fundraising remains healthy on a historical basis, with €55.8 billion raised across 54 funds in the first three quarters. Though, 2018 activity is skewed by 1Q 2018 PE fundraising results – More than half of 2018’s total capital raised was accounted for in the first quarter where 15 funds raised €31.5 billion, which included three mega-funds—the only mega-funds to close in 2018.
  • The UK and Ireland continued to be stable hubs for PE fundraising, making up nearly half (44%) of the proportion of total PE fundraising, followed by the Nordic region (33%), which is more than twice the record-setting proportion of PE fundraising the region recorded in 2008 (16%).
  • Following the trend witnessed in the broader PE market, investors continued to raise fewer, larger funds to keep pace with ballooning deal sizes. To date, 77.9% of all capital raised was in funds above €1 billion, outpacing the record of 73.5% in 2013.

Additional coverage in this report includes:

  • Overview
  • Deals by sector & size
  • Deals by region
  • Spotlight: Carveouts
  • Exits
  • Fundraising

Download the full report here.

Editor - With a passion photo photography, webdesign and content, it made sense for me to also integrate news editing and press release publishing. I am also passionate about the car industry, so you will surely find some exciting news reporting from my side about the automotive industry.

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Banking/Financial Services

OKEx Launches Thai Baht (THB) and British Pound (GBP) OTC Trading

Vlad Poptamas

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OKEx Launches Thai Baht (THB) and British Pound (GBP) OTC Trading - Source: OKEx
Reading Time: 2 minutes

 

OKEx, the Malta-based world-leading digital asset exchange, announced to launch two new currencies – Thai Baht (THB) and British Pound (GBP) on its over-the-counter (OTC) trading platform (also referred to as fiat-to-cryptocurrency platform). Users in Thailand and the United Kingdom can now complete KYC verification to be eligible to trade on the OTC trading platform.

OKEx OTC trading allows users to place orders with self-selected exchange rate and payment methods to buy or sell Virtual Financial Assets with fiat currencies, which benefits them by offering a low-volatility market and zero transaction fee. Instead of the listing of the new currencies, Thai Baht (THB) and British Pound (GBP), OKEx OTC trading platform has already been facilitating global digital assets trading with the Vietnamese Dong (VND) and Chinese Renminbi (CNY) fiat-to-cryptocurrency markets, and more currencies are expected to come in at a later time this year. The Thai Baht (THB) and British Pound (GBP) OTC trading markets currently support BTC, USDT, ETH, and LTC.

“Our mission is simple at OKEx. We aim to offer flexibility and convenience to our traders. Thailand and the UK own the fastest growing crypto communities in the world. We see great potential in these two markets and want to support the needs there. Because of the increasing trading volume and number of traders in these two countries, we decided to launch the new THB and GBP trading services on our OTC trading platform. Wherever the market potential locates, we will expand to there. In 2019, you can expect more currencies will be supported on OKEx,” said Andy Cheung, OKEx’s Head of Operations.

OKEx OTC Network Launch Events and Promotions

To celebrate the launch, OKEx has come up with new incentives to encourage new sign-up for merchants and customers in Thailand and the UK. From January 23 to 27, newly registered customers can earn up to 50 USDT for making a minimum deposit of 100 USDT (or equivalent) and complete their first OTC transaction on OKEx, while the top 70 merchants with the most transaction volume will be rewarded 30 USDT (1 time per day).

In addition, the OKEx OTC Network Launch events will be hosted in Bangkok, Thailand on February 13, 2019 and London, UK in March respectively.

For more details, please refer to OKEx Twitter.

Risk Warning: Trading digital assets involves significant risk and can result in the loss of invested capital. Users should ensure that they fully understand the risk involved and take into consideration their level of experience, investment objectives and seek independent financial advice if necessary.

 

 

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Banking/Financial Services

Forrester: Customer Experience in the UK Stagnates With More Brands Becoming Mediocre

Vlad Poptamas

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Joana van den Brink-Quintanilha.
Reading Time: 2 minutes

 

Not a single brand in the UK has managed to rise to the top of Forrester’s Customer Experience Index (CX Index™) rankings or continued to move upward. Customer experience (CX) quality languished in 2018 as more brands become mediocre.

Forrester’s CX Index methodology measures how well a brand’s customer experience strengthens the loyalty of its customers. Based on a survey of 9,033 UK adult customers in 2018, Forrester benchmarked CX quality at 36 brands doing business in the UK.

Liverpool Victoria (LV=) confirmed its position as number one in the auto/home insurers category. Nationwide Building Society still topped the banks rankings in 2018 despite seeing its score stagnate, while new entrant Very.co.uk takes over Amazon’s position in the digital retailers category. John Lewis continues to be the number one multichannel retailer and while Tesco came out on top among wireless providers.

The percentage of UK brands making it into the good category fell from 31% in 2017 to just 14% in 2018. A staggering 86% now deliver OK experiences, which suggests customers are struggling to tell the difference between the experiences offered by competing brands.

The auto/home insurance and multichannel retailer industries saw their average score rise by a small but statistically significant amount this year. In contrast, the industry average score for banks fell by almost 4 points, with all but one of the seven banks seeing a statistically significant decline to their score. This year, the banks provided an average of seven emotionally positive experiences for each negative experience, down from 11 in 2017.

In fact, Forrester believes that emotion is key to the positive development of a brand. “Brands that want to break away from the pack should focus on emotion: How an experience makes customers feel has a bigger influence on their loyalty to a brand than effectiveness or ease in almost every industry,” says Joana van den Brink-Quintanilha.

Even a minor improvement to a brand’s customer experience quality can add tens of millions of dollars of revenue by reducing customer churn and increasing share of wallet. What’s more, customers with positive emotions are more willing to pay a premium price for the same products and services.

To learn more about how Forrester’s CX Index can help your business and register for a demo, please visit https://forr.com/2CvyfZh.

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Banking/Financial Services

Licensed Crypto Exchange Covesting Introduces Fiat Gateway

Zoltán Tűndik

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Reading Time: 1 minute

 

Covesting, a licensed European-based digital currency exchange and professional trading platform offering secure and technologically advanced infrastructure for investors and traders worldwide, has introduced the first stage of their fiat gateway and cryptocurrency converter. EUR deposits via wire transfer are now available.

Additional options for fiat deposits/withdrawals as well as the buying and selling of cryptocurrencies will be released in stages over the coming weeks.

Covesting’s Founder and CEO, Dmitrij Pruglo, spoke about the company’s latest update, saying:

“The launch of a fiat gatewayis yet another step towards our ultimate goal of being the most complete, secure and transparent cryptocurrency platform in the industry. Allowing retail and institutional clients to legally exchange fiat into crypto automatically gives Covesting an edge and puts us among very few exchanges who offer such a solution. There are hundreds or maybe even thousands of crypto-crypto exchanges out there, but few who offer a legally compliant bridge between crypto and the traditional world of finance. We will continue to monitor the market and adapt to the new reality while offering the most demanded tools for our users.”

 

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