Which way is the Nordic M&A market heading? Presented to DIRF on 27 March Johannes Vasehus Managing Partner Corporate Finance Denmark

Transcription

1 Presented to DIRF on 27 March 2014 Johannes Vasehus Managing Partner Corporate Finance

2 Your speaker today Johannes Vasehus Managing Partner Corporate Finance Profile and experience Managing Partner in Deloitte Corporate Finance since years of investment banking experience from Nordea Co-founder of biotechnology and renewable energy startup in Spain MSc in Business Administration and Commercial Law from CBS and Stern, NYU 19 transactions completed in 2 transactions in 2014 YTD Selected Deloitte Corporate Finance references In the sale to In the sale to in the divestment of to in the sale of a majority stake to in the public takeover by in the private placement of shares to in the sale to in the acquisition of and selected weekly newspapers from Deal value: DKK 478,500, in the sale of to in the acquisition of in the divestment of to in the acquisition of in the sale of ISS Document A/S to in the sale to Undisclosed in the sale to in the sale of in the sale of AREPA IT Service to in the sale to in the acquisition of ITW Wiremesh from in the sale to in the sale of Byggeriets Forsikringsservice to in the sale to Invest

3 Nordic M&A market statistics country by country Danish, Swedish, Norwegian and Finish M&A transactions (2006-) Avg. Avg % +1.1% '06 '07 '08 '09 '10 '11 '12 '13 '06 '07 '08 '09 '10 '11 '12 ' Avg. Avg % % '06 '07 '08 '09 '10 '11 '12 '13 '06 '07 '08 '09 '10 '11 '12 '13 M&A market in significantly above historical average Private equity involved in approx. 25% of Danish deals Sweden 25% below historical average Norway and Finland in line with historical average Strategic vs. financial buyers 85% 88% 84% 77% 77% 79% 79% 83% 82% 87% 89% 85% 81% 78% 85% 85% 15% 13% 16% 23% 23% 21% 21% 17% 18% 13% 11% 15% 19% 22% 15% 15% = Strategic buyers = Financial buyers Source: mergermarket 2

4 Nordic M&A market statistics deal size M&A size breakdown, Nordic targets (value, EURm) Nordics 65% 35% 49% 62% 81% 80% 79% 91% 43% 36% 24% 31% 11% 15% 4% 16% 4% 16% 5% 22% 7% 2% 8% 15% EV (EURm) >250 EV (EURm) >250 No significant change in deal size from 2012 to on an aggregated Nordic level Higher number of small cap deals in the Danish market significant growth in deals below EUR 50m from 2012 to M&A size breakdown, Nordic targets (number of transactions, EURm) Nordics 10% 16% 16% 17% 23% 28% 26% 24% 6% 25% 22% 25% 12% 12% 33% 26% 66% 56% 58% 59% 69% 53% 55% 62% EV (EURm) > EV (EURm) >250 Source: mergermarket 3

5 Significant change in private equity involvement in and Sweden Danish, Swedish, Norwegian and Finish PE-backed transactions (2006-) % Avg. Avg. Avg. Avg % % +11.1% '06 '07 '08 '09 '10 '11 '12 '13 '06 '07 '08 '09 '10 '11 '12 '13 '06 '07 '08 '09 '10 '11 '12 '13 '06 '07 '08 '09 '10 '11 '12 '13 Sources of proceeds as a multiple of EBITDA (European PE transactions 2002-) Private equity successful in almost 25% of deals in 42% increase compared to 2012 Radical drop in PE involvement in Sweden - even higher than overall drop in the M&A market Leverage of 4.7x EBITDA at highest level since x 8x 6x 7.0x 6.8x x x x x 9.7x 8.9x 9.2x 9.3x 8.8x 8.7x x 2x x Debt/EBITDA Equity/EBITDA Other/EBITDA Source: mergermarket & S&P leveraged data 4

6 Which way is the Nordic M&A market heading in 2014? Positive underlying trends supporting future M&A activity 1 Drivers Valuation 2 Bank financing 3 Private equity dry powder 4 General economic development 5

7 The Nordic stock market indices trade above 10-year average Median EV Multiple 16x 14x 12x 10x 8x 6x 4x 2x OMX Nordic 40 OMX Copenhagen 20 0x Feb-04 Feb-06 Feb-08 Feb-10 Feb-12 Feb-14 EV/EBIT (FY1E) EV/EBITDA (FY1E) EV/Sales (FY1E) 13.8x 11.9x 10.1x 9.0x 2.2x 1.9x 10yr avge. Median EV Multiple 25x 20x 15x 10x 5x 0x Feb-04 Feb-06 Feb-08 Feb-10 Feb-12 Feb-14 EV/EBIT (FY1E) EV/EBITDA (FY1E) EV/Sales (FY1E) 17.1x 14.7x 14.6x 10.8x 3.4x 2.2x 10yr avge. OMX Nordic 40 EV/EBITDA is trading 13% above 10-year average OMX C20 EV/EBITDA is trading 37% above 10-year average OMX Stockholm 30 OMX Helsinki 25 Median EV Multiple 16x 14x 12x 10x 8x 6x 4x 2x 1.7x 1.4x 0x Feb-04 Feb-06 Feb-08 Feb-10 Feb-12 Feb-14 EV/EBIT (FY1E) 13.0x 11.2x 9.5x 8.5x Median EV Multiple 16x 14x 12x 10x 8x 6x 4x 2x 0x Feb-04 Feb-06 Feb-08 Feb-10 Feb-12 Feb-14 EV/EBITDA (FY1E) EV/Sales (FY1E) 10yr avge. EV/EBIT (FY1E) EV/EBITDA (FY1E) EV/Sales (FY1E) 10yr avge. 12.7x 11.4x 9.1x 8.1x 1.0x 0.9x Source: Factset March 2014, monthly data, banks and insurers are excluded 6

8 1 Which way is the Nordic M&A market heading? The stock market is now trading at a premium to the M&A market 9.8x EV/EBITDA multiples for traded Nordic companies and deals (2005-) 14.0x 11.6x 11.4x 10.8x 10.6x 10.3x 10.3x 10.3x 9.7x 9.8x 9.8x 10.9x average EV/EBITDA multiple for traded companies exceeds average deal multiple by 2.1x Expected surge in IPO activity in 2014 driven by attractive valuation levels 9.2x 9.2x 8.8x 8.2x 8.3x EV/EBITDA - Nordic deals EV/EBITDA - traded Nordic companies Source: mergermarket and Factset 7

9 2 Which way is the Nordic M&A market heading? Senior loan volume has increased significantly from 2012 to EURbn European LBO: Annual Senior Loan LBO Volume year average LBO loan volume of EUR 29bn Loan volume almost doubled from 2012 to Average EUR 29bn Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Note: (1) Reflects loan volume of any transaction where the issuer is owned by a PE firm (includes buyouts, recaps, refinancing, etc.) Source: S&P leveraged data, European LBO quarterly review, Q and 8

10 2 Which way is the Nordic M&A market heading? Increasing number of LBOs with gearing levels at 5x EBITDA or more 100% 80% 60% 40% 20% 0% Distribution of European LBOs by pro forma debt/ebitda levels 2% 0% 4% 4% 8% 6% 5% 10% 10% 14% 14% 10% 13% 14% 23% 16% 18% 32% 30% 37% 36% 19% 20% 24% 38% 51% 24% 30% 36% 39% 38% 29% 32% 7% 44% 27% 37% 41% 35% 31% 29% 35% 19% 31% 36% 36% 23% 27% 41% 30% 36% 26% 18% 21% 24% 23% 13% 30% 23% 18% 15% 28% 16% 11% 13% 15% 21% 14% 10% 8% 11% 8% 11% 8% 3% 5% 4% 3% 3% 3% 5% 7% 10% 10% % of LBOs in was completed with a gearing level of 5.0x EBITDA or more compared to 30% in 2012 Less than 3.0x 3.0x to 3.9x 4.0x to 4.9x 5.0x to 5.9x 6.0x or Higher Source: S&P Leveraged Data, European LBO Quarterly Review, Q4 9

11 Aggregate commitments (USDbn) 3 Which way is the Nordic M&A market heading? Significant PE dry powder in Europe Average EUR 155bn PE dry powder in Europe (USDbn) Available dry powder amongst European PE funds grew by 13% during Aggregate commitments in European PE fundraising grew by 70% during and funds raised by 13% Source: Prequin, 2014 Buy-out Distressed PE Growth Venture Others European focused fundraising Number of funds raised Source: Prequin, 2014 Aggregate commitments Number of funds raised 10

12 4 Which way is the Nordic M&A market heading? Moderate positive economic outlook for 2014 in all Nordic countries -0.8% GDP growth 1.4% 1.1% 0.4% 0.3% 1.6% 1.9% 5.0% GDP growth Sweden 6.3% 3.0% 2.3% 3.0% Positive economic outlook (although moderate) expected to further stimulate the Nordic M&A market -5.7% -0.5% 1.3% 0.7% GDP growth Norway GDP growth Finland 3.2% 2.8% 3.1% 8.5% 1.2% 1.2% 0.1% -1.6% 0.5% 0.3% 3.4% 2.7% -0.8% -1.0% 1.3% 1.9% Source: OECD 11

13 Conclusions 1 Conclusions Large variation in M&A activity in the Nordic countries during 2 Positive development in driven by deals below EUR 50m and increased private equity participation 3 Very high stock market valuations premium to private M&A but also opportunity for multiple pick-up 4 5 Loan market volumes continuing to expand approaching 15-year average and leverage levels continuing to improve PE dry powder at a very high level and sharp increase in fundraising 70% growth in aggregate commitments 6 Positive economic outlook (although moderate) 12

14 Thank you! Johannes Vasehus Managing Partner Corporate Finance