Preqins quarterly deal-flow data shows 309 private equity (PE)-backed exits valued at $120.1 billion occurred in Q2 2011, surpassing the previous record of $81.5 billion in exits in Q4 2010; 674 PE deals worth $75.6 billion were announced in Q2 2011, an increase of 33% from the value of deals in the previous quarter.
According to Preqin, a leading source of information for the alternative assets industry, global statistics in Q2 2011 674 PE-backed buyouts valued at $75.6 billion were announced, surpassing the previous post-Lehman high of $67.4 billion from 689 deals in Q4 2010, and up a third from the $56.5 billion in deals completed in Q1 2011.
“There was a surge in global private equity deal and exit-flow in Q2 2011, and once again it reached record levels,” says Manuel Carvalho, Manager – Private Equity Deals at Preqin. “Despite increased competition from cash-rich trade buyers competing for assets. Interestingly, larger deals have returned this quarter; 21 deals valued at over $1 billion were announced during Q2 2011, including four deals valued at over $2.5 billion, an increase from the single deal valued at over $2.5 billion completed in Q1 2011. As buyout fund managers continue to sit on approximately $380 billion of dry powder, we expect to see a sustained upward trend in buyout deal flow, and the continued return of large-cap deals valued at over $1 billion.”
Notable deals include the acquisition of a 70% stake in Frac Tech for $3.5 billion by RRJ Management, Temasek Holdings, Chesapeake Energy Corporation and the CPP Investment Board in April 2011, and the SEK 21 billion ($3.3 billion) acquisition of Securitas Direct by Hellman & Friedman and Bain Capital from EQT
Partners in June 2011.
This increase in deal flow is partially attributed to an increase in larger deals, with 21 deals valued at over $1 billion announced during the quarter, compared to 13 deals valued at over $1 billion in Q1 2011.
Deal value is over seven times greater than during mid-2009, but is still a long way off the highs seen in the buyout boom era of 2005-2007, which peaked in Q2 2007 at $269.6 billion in deals.
A post-Lehman high of $39.2 billion of North American deals were announced, a significant 63% increase from the $24.1 billion in deals announced in the previous quarter and surpassing the $38.4 billion-worth of North American deals completed in Q4 2010.
European deal value increased by over a third compared to the previous quarter; $30 billion in buyouts were announced in the period, surpassing the previous post-financial crisis high of $27.1 billion of buyouts completed in Europe in Q3 2010.
There has been a dip in deal flow in Asia and Rest of World; $6.3 billion in buyouts were completed, a drop from the post-financial crisis high of $10.6 billion in the region in Q1 2011. However, deal flow remains at similar levels to 2010, and is about 50% higher than the average of $4.3 billion per quarter registered in 2009.
Leveraged buyouts accounted for 60% of aggregate deal value and just over 40% of the number of deals. Public to private and PIPE deals made up 7% of the number of deals but contributed 22% of the aggregate value of PE-backed deals globally.
Deals valued at over $1 billion represented 8% and 49% of the number and aggregate value of deals announced globally respectively. Mid-market deals accounted for 21% of the number of deals and 35% of the aggregate value of deals this quarter globally, while small-cap deals represented the bulk of deals announced this quarter with 71% of deals valued at less than $250mn.
Over a quarter of all buyout deals were completed in the industrials sector. 309 PE-backed exits valued at $120.1 billion occurred in the quarter, surpassing the previous record of $81.5 billion in exits in Q4 2010. There were 96 secondary buyouts valued at $24.4 billion, more than double the $11.5 billion announced during the first quarter of 2011 and continuing the resurgence in secondary buyouts which began in 2010.
“In addition, exit flow hit all-time record levels of $120.1 billion globally in Q2 2011, with fund managers in recent quarters taking advantage of the return of trade buyers with high levels of cash at their disposal and relatively robust financial markets to begin to exit investments made during the buyout boom-era,” says Carvalho. “As exit and buyout levels remain at record levels, this should reflect itself in the fundraising market; with dry powder levels having fallen by over $100 billion in the past 18 months as PE firms invest the capital, and distributions from exits being returned to institutional investors, it is likely we will begin to see more fund managers seeking to raise funds in the coming months.”
(LB)