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Global Rise in the Aggregate Value of Secondary Buyouts in H1 2014

by Catriona McCarron

  • 02 Jul 2014
  • PE

According to Preqin’s Buyout Deals Analyst, the first half of 2014 has seen 723 exits from private equity-backed portfolio companies, the second highest recorded half-yearly number of exits in the buyout sphere since 2006. The aggregate exit value of which equates to $228bn, the largest half-annual exit value recorded since 2006. 

In H1 2014, there were 213 sale to GP exits, otherwise known as secondary buyouts (SBO), the second greatest half-annual number of exits via sales to another private equity firm since 2006. The aggregate value of SBO exits in 2014 YTD equated to $53bn and this is the largest half-annual value witnessed since before the global financial crisis. In H1 2007 secondary buyouts contributed $69bn to the global total exit value. Last 12 months’ figures, with H2 2013 witnessing the highest half-annual number of SBOs, at 220, and H1 2014 contributing the highest half-annual aggregate value of SBOs since the financial crisis, suggest that despite varying views from the private equity industry in regard to the attractiveness of SBOs, activity in the secondary buyout market has been on the rise. 

North American SBOs, or so called ‘pass-the-parcel’ deals, accounted for 52% of the total number of secondary buyouts globally and 57% of the global aggregate value in H1 2014. This is in contrast to the first half of 2013 when SBOs in the region contributed 56% of the number but only 19% of the total global value. European sales to GP have accounted for 41% of the global total value and 42% of the number of such exits so far this year. This is in comparison to the 74% of the global value that they accounted for in H1 2013 and 33% in H2 2013. 

The sector to experience the highest number of SBO exits this year was industrials, which saw 59 exits valued at $16bn, $5.4bn of which came from the sale of Gates Global Inc. by Tomkins plc (backed by CPP Investment Board and Onex Corporation) to Blackstone Group, announced in April 2014. Consumer & Retail saw the second largest number of SBOs (40), followed by the healthcare sector, at 27.

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