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Why Private Equity funds like the Food sector

Why Private Equity funds like the Food sector

Although perceived as a mature industry, Private Equity firms are attracted to the Food sector for several reasons.

"First is the innovation imperative, with manufacturers and retailers seeking innovative products, from healthier and functional foods for the booming market for ready meals. Private equity investors are experts at matching innovative businesses with networks of suppliers, partners and customers, and this can create real value in the food and drink sector," says Private Equity investor 3i, talking to www.foodnavigator.com.

Second is the ongoing consolidation that has seen the number of inter European mergers and acquisitions rising in the past two years, and subsequently creating opportunities for bolt-on acquisitions.

"Third is the evolution of continental Europe's food market, which remains highly-fragmented. The take-up of convenience products, for example, is far below the levels seen in the UK or the US."

Historically, the bulk of private equity investment in the food and drink sector in Europe has been in the UK. But now the centre of gravity is shifting to the continent. In 2000, 80 per cent of the value of private equity deals in the sector was in the UK. In 2004, by contrast, 83 per cent of deals were in continental European countries, claims 3i, citing data from Initiative Europe.

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