Private Equity Capital Briefing
Monthly insights and intelligence on private equity and capital market trends
- PE fundraising is seeing another strong year. To date, PE firms have closed funds valued at US$231b, up 9% from the same period last year. This represents the second-most active start to a year on record.
- Funds with the inherent ability to deploy large amounts of assets into the market are driving the trend. In the first five months of last year, buyout fundraising represented 39% of total PE fundraising. So far this year, buyout fundraising is 46% of total fundraising. Similarly, infrastructure increased from 10% of aggregate fundraising to 14%. Growth capital, real estate funds and other strategies have seen relative declines.
- Activity is currently centered on the US. Firms have raised US$165b for US-focused funds this year, up 45% from the same period a year ago. The Asia-Pacific region has seen a modest increase, with US$18.6b raised, up 11% from a year ago.
- After an active 2016 that saw fundraising increase nearly 30% vs. the prior year, activity in Europe has declined, from US$76b last year, to US$38b raised through the first five months of 2017.
- Deal activity remains strong. PE firms announced 117 deals valued at US$27.2b in May, bringing the YTD total to 565 deals valued at US$123.6b, up 0.6% from the same period a year ago.
- On a sector basis, technology remains active, accounting for 17% of the capital invested. This is down from last year, however, when technology was 29% of capital invested. The consumer products and retail sector has been more active than last year, accounting for 20% of PE investment, up from 10% a year ago. Large deals in the space include Bain’s acquisition of Diverseyfor US$3.2b; CDH’s investment in Belle International for US$5.8b; and L Catterton’s investment in Leslie’s Poolmartfor US$1.8b.
- In 2014 and 2015, add-ons were an attractive way for firms to put capital to work amid a high-price environment. Firms announced add- on deals valued at US$260b in 2015, which was a record. However, since then the pace of bolt-ons has decreased as increased competition for deals has extended well into the middle market, negating some of the lower multiples such deals have historically provided.
- May was an active month for PE exit activity, with firms announcing 94 deals valued at US$42.3b, a 41% increase over last year.
- Overall, 2017 has seen a rebound in exit activity after a quiet year in 2016. Firms have announced deals valued at US$146.6b, up 29% from last year, with activity increasing across all exit routes: Firms have announced 239 exits via trade sale valued at US$91.9b, up 21% from a year ago; exits via secondary buyouts are up 41% by value vs. a year ago, to US$39.7b across 133 deals; and PE-backed IPOs have increased markedly vs. last year, when global new issuance markets were largely closed on macro concerns and negative investor sentiment. PE firms have taken 49 companies public with an aggregate value of US$16.2b.
- While sales to strategic investors still account for the bulk of PE sales, their relative importance has declined this year as PE firms became more active in secondary sales and IPOs. Last YTD, sales to strategic investors accounted for 67% of total exited value; this year, such sales have accounted for 62% of total exit value. Sales via secondary and IPO have both increased as a percentage of exits.
About the Private Equity Capital Briefing
The Capital Briefing helps you keep current on private equity trends and data, including fundraising, acquisitions and exits. It also provides perspectives on the global M&A market, cross-border deal flows, initial public offerings (IPOs), debt and bond markets.