2014 was a successful year for private equity-backed buyout deals; Preqin’s Buyout Deals Analyst online service recorded an aggregate global deal value that exceeded $332bn, the highest since 2007. Of particular interest has been the resurgence within the materials industry classification, which encompasses chemicals, mining and natural resources companies among others. The number of buyout deals within this industry for 2014 reached 110, a marked increase on the previous year when 80 deals were recorded.
The materials industry recorded an aggregate deal value of $10bn in 2011, which then decreased for two consecutive years to $6.9bn. Billion-dollar deals, such as Clayton, Dubilier & Rice’s $1.8bn acquisition of chemical company Ashland Water Technologies, CVC Capital Partners’ participation in Parex Group and the recently announced $1.4bn purchase of Hanson Building Products by Lone Star Funds, helped push the 2014 aggregate deal value to $14.8bn, representing a 114% increase on the previous year’s total. Furthermore, the average deal size increased from $221mn in 2013 to $353mn in 2014.
In terms of geography, the majority of investments in the materials industry were attributable to portfolio companies that reside in North America, with 65 deals worth a total of $7.8bn occurring in this region in 2014. Europe has also seen a rise in the aggregate value of private equity-backed buyout deals, increasing from $3.5bn in 2013 to $5.5bn in 2014.