Preqin: Value of Q2/16 Global PE Deal Flow Up 77% to $89B

Jul 1 2016 | 7:34pm ET

Private equity deal flow rebounded during the second quarter to reach $89 billion in value, up 77% from the first quarter, according to Preqin’s Q2 2016  Buyouts, Deals and Exits update. 

Although a healthy improvement quarter over quarter from Q1’s disappointing $50 billion, the tally remains down significantly from the $102 billion seen during last year’s comparable period. Preqin expects the quarter’s total to rise by 5-10% as more data becomes available. 

The number deals, however, was slightly higher, at 1,004 in Q2 versus 940 recorded in Q1, and represents the highest quarterly figure since Q4 2014.

Exits also remain healthy, with the PE-backed exit market expanding during the second quarter to reach 434 exits announced globally worth a combined $90 billion, an 18% increase in the number of exits and a 33% increase in exit value from Q1. Nonetheless, the same period last year saw 453 exits announced globally worth a total $126 billion, Preqin noted. 

Other key facts from the report:

  • North America and Europe accounted for 89% of the deal flow in Q2, as the tworegions recorded 534 and 356 deals respectively. However, the $57 billion in aggregate deal value for North America was more than double the $25 billion seen in Europe.
  • Leveraged buyouts represented the largest proportion of both the number of deals (40%) and the aggregate deal value (53%) in Q2. Although the 16 public-to-private deals in the quarter account for just 2% of the number of deals, they represent 21% of total deal value.
  • Information technology deals accounted for just under a quarter of aggregate deal value (24%), down from 28% in Q1 but still the largest proportion. Although deals in the Industrials sector represented 22% of the number of deals, they were worth just 9% of the aggregate value in the quarter.
  • Trade sales accounted for half the number of exits and 51% of the aggregate exit value in Q2, the largest proportion of both totals. The number of IPOs and private placements of buyout-backed companies tripled from the low levels seen in the previous quarter.
  • The largest buyout-backed deal in Q2 2016 was also the largest exit: The May sale of MultiPlan by an investor group including Ardian, Partners Group and Starr Investment Holdings to a consortium including GIC, Hellman & Friedman and Leonard Green Partners for $7.5 billion.

“The first quarter of 2016 was a period of relatively low activity for the private equity buyout deals market,” said Christopher Elvin, head of private equity products for Preqin. “Both the number of deals globally and the aggregate deal value fell.”

However, the high number of deals announced during the quarter and a significant rise in overall deal value suggests managers are returning to levels of pricing and competition seen through much of 2015, Elvin added. “IPOs and private placements saw particular growth over the quarter, with the number of exits tripling and the aggregate value increasing significantly; nonetheless this exit type still accounts for less than a quarter of the total exit environment.” 

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 40,000 professionals in 90 nations use the company’s products.  


Lifestyle

Survey: Wall Street Banks Still Top Silicon Valley, Hedge Funds for Freshly-Minted MBAs

Jun 21 2016 | 9:01pm ET

Contrary to concerns that Wall Street isn't as appealing to new graduates as it...

Guest Contributor

The Future of the Blockchain in Financial Services Communications

Jun 17 2016 | 1:05pm ET

Over the past year, a large portion of the financial services industry has awakened...