White & Case: How private equity is powering financial services M&A

White & Case: How private equity is powering financial services M&A

Chamber Member News Post Date: 12/19/17 Source: White & Case By: Prof. Dr. Roger Kiem, Patrick Sarch, Gavin Weir and Hyder Jumabhoy
Intro Links: 

In 2015, for the first time ever, private equity buyouts accounted for almost a fifth of all European financial services M&A by deal value. It was a landmark year for financial sponsors, who had previously found it difficult to compete in a highly regulated sector against multinational strategic buyers with low cost of capital.

The financial crisis provided a unique opportunity for private equity firms to gain a foothold in the financial services space. Financial institutions simultaneously pulled back from M&A and sold off non-core divisions in order to repair balance sheets and shore up capital reserves. Buyout firms were suddenly seeing an unprecedented number of deal opportunities with little or no competition from strategics.

PE progress:

Private equity groups have not looked back, and the buyout industry has consolidated its position as a formidable player in financial services dealmaking during the last two years.

Even though strategics have returned to the fray, with larger deals such as Lloyds Bank’s £1.9 billion purchase of credit card company MBNA from Bank of America, private equity has continued to hold its own. In Europe in 2017 (year to date), buyout firms have secured 37 deals worth €6.9 billion in financial services, accounting for approximately 15 per cent of all deal activity in the sector. This is substantially higher than the average over previous years. Read Full Article