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IT entries account for 38% of Q2'20 European PE and VC activity

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IT entries account for 38% of Q2'20 European PE and VC activity

Information technology remained the most popular sector for European private equity and venture capital deal flow in the 2020 second quarter, with assets seen as a safe bet as locked down countries relied further on digital solutions.

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A total of 803 IT entries were announced in the first half of 2020 with a gross transaction value of €13.29 billion, according to S&P Global Market Intelligence data. Combined with add ons, deal volume in the sector totaled 1,097, while aggregate value was €14.14 billion. A total 2,133 entries across all sectors were announced over the period, worth €63.65 billion.

Of the first half's 803 IT deals, 380 entries were announced in the second quarter, worth an aggregate €4.22 billion. IT deals accounted for 38% of the total 1,003 entries across all sectors during the quarter, highlighting the attractions of the sector to private equity and venture capital buyers despite ongoing uncertainty. Activity in the sector was down year on year, however, from 891 entries.

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The largest IT deals in the first half include Insight Venture Management LLC's acquisition of Switzerland-based cloud data management company Veeam Software Group GmbH for a total transaction value of €4.5 billion, according to S&P Global Market Intelligence data. Bain Capital Pvt. Equity LP also bought Italian IT services provider Engineering Ingegneria Informatica SpA in a deal valued at €1.6 billion, marking an exit for NB Renaissance Partners and Apax Partners LLP. Both deals were announced in the first quarter.

Entry deals in healthcare, a sector made more attractive by increased demand for services following the coronavirus outbreak, totaled 304 in the first half of 2020. Of these, 151 were announced in the second quarter. Over the same 2019 periods, announced entries totaled 308 and 160, respectively.

Entries in the sector drew in announced aggregate value of €3.66 billion in 2020, €1.46 billion of which came from deals in the second quarter.

Including add on activity, deal numbers sat at 418 in the first half, compared with 431 deals in the first six months of 2019.

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Industrials drew in the highest amount of capital in the first half of 2020, with the sector's 261 entries valued at a combined €22.72 billion. Including add ons, the sector saw aggregate values of €23.57 billion. But entry and add on activity slumped by 27% on first-half 2019 levels to 455 deals from 620. Likewise, volumes in the second quarter fell to 117 from 144 in the first quarter as the coronavirus swept across Europe hindering dealmaking.

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Private equity and venture capital deals in the consumer discretionary and staples sectors also slumped in volume terms in the first half of 2020 compared with 2019, as lockdowns shuttered restaurants and uncertain conditions prevented consumers spending on luxury items.

Consumer staples entries fell by 27% to 77 deals announced from 106 deals across the same period in 2019. Entries dropped by 25% to 33 deals in the second quarter of 2020, from 44 in the first quarter.

Consumer discretionary entries fell by 21% to 224 deals from 282 in the first half of last year, while quarter on quarter activity also dropped by 21%, from 125 deals in the first quarter to 99 in the three months to June 30.

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