Large-cap leveraged buyouts (LBOs), which are defined as deals that are valued at $1bn or more in size, symbolized the private equity industry in the buyout boom-era period. During 2006 and 2007, $1.02tn was invested globally across 266 large-cap transactions.
After the global financial crisis, deals of this size became uncertain. Credit markets tightened and lenders struggled to provide large financings to support such large transactions. This began to show as early as the second half of 2007, when transaction volume for large-cap buyouts dropped 44%. Following this, transaction volume continued to decrease, with 2008 seeing a 65% drop compared to levels recorded in 2007, and 2009 dropping a further 67%.
Since 2010 however, private equity sponsors have been more willing to commit capital to larger deals. Transaction volume increased significantly in 2010 by 225% (when compared to 2009 figures), and the upward trend has been continuing since, with 2011 producing 23% more large-cap deals than the previous year.
In 2012 so far, $92.6bn has been invested globally across 49 large-cap deals. The largest single transaction was the $7.15bn leverage buyout of El Paso Corporation Oil and Natural Gas Exploration and Production Assets completed in May 2012. The deal amount was provided by a consortium of investors, including Apollo Global Management, Riverstone Holdings, Access Industries, and Korea National Oil Corporation. The deal is supported by a $5.5bn debt package. Citi and J.P. Morgan were the co-lead bankers on a $3.5bn bridge to bond loan, while J.P. Morgan was the lead banker on a $2bn revolving credit facility.