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Assets under Management in Private Equity-Backed Buyout Portfolios

by Jessica Hull

  • 16 Aug 2012
  • PE

In the private equity buyout industry fund managers hold a wide array of portfolio companies located in various geographies and operating in numerous different sectors. Preqin’s extensive data regarding buyout investments shows that there are over 18,000 portfolio companies currently held by buyout firms globally. Of the portfolio companies currently held by private equity firms, 55% of are based in North America, representing 60% of the aggregate value of these private equity investments and reflecting this region’s dominance over the past decade. The second most dominant geographic region for investment is Europe, with a third of buyout deals accounting for 30% of the total value of deals. The remaining 13% of companies yet to be fully exited are based in Asia and Rest of World and account for 9% of the total aggregate value of buyouts.

The investments made by buyout GPs are typically held for a period of 3-5 years, in order to add a significant amount of value before successfully exiting the investment. The most common exits are secondary buyouts, trade sales or by listing on the stock market through initial public offerings (IPOs). Bearing in mind this typical holding period, Preqin research reveals that of all the investments made in the boom period (2006-2007), only 28% and 19% of deals in 2006 and 2007 respectively have been fully exited from. During the boom-era, private equity-backed buyout transactions had a net worth of $1,308bn, which is significantly higher than the aggregate value of all buyout transactions made between 2008 – 2012 YTD. Distress in the global financial markets has created a challenging environment for exiting investments; as a result, the typical holding periods of buyout GPs have lengthened, which reflects in the low percentages of deals in 2006 and 2007 that have been fully exited. Despite uncertain conditions, the number of exits has improved during  upturns in the economic environment. For example, Q2 2011 recorded approximately £130bn worth of exits, which is a record quarter for the industry.

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