Industrials: The most prominent industry sector in private equity

by Kevin Neadley

  • 15 Sep 2011
  • PE

From the period 2006 to present, the most prominent industry sector for global private equity-backed buyout deals has been the industrials sector. Of the 14,222 total number of global deals made during this period, 4,229 (30%) of them were made in industrials accounting for $338.9bn (17.3%) of aggregate capital.

Preceding the financial crisis and ensuing recession, the number and aggregate value of industrials deals peaked in H1 2007 at 505 deals representing $62.2bn. However, following the onset of the global financial crisis, deal-flow activity steady declined from mid 2008 with deal volume and sizes reached a low-point in H1 2009 at 198 deals, equating to just $4bn.

Since this period, deal-flow activity in the industrials sector has increased. In particular, the second half of 2010 was a more promising half of the year, with 347 deals being announced valued at a total of $32.5bn. This increase in the number of deals continued into the first half of 2011, with 351 deals announced for an aggregate $31.7bn.

The majority of industrials deals made during 2011 YTD have been leveraged buyouts, which represent 55% of the total number of announced deals. Add-on (or bolt-on) deals account for 31%, whereas growth capital and public to private deals account for 9% and 5% of the total, respectively.

The majority of the deals announced in the industrials sector in 2011 YTD have been made in North America, with the region accounting for 52% of all deals. Europe and Asia & ROW accounted for 35% and 13%, respectively. Despite North America attracting the majority of deal volume, of the five largest PE-backed industrials buyout deals made in 2011 to date only one has been based in North America.

The largest industrials deal announced this year so far was in May 2011, when AXA Private Equity, Clayton Dubilier & Rice and Caisse de depot et placement du Quebec clubbed together to acquire the France-based company, SPIE, for €2.1bn. PAI Partners exited its investment in the company after originally acquiring SPIE in July 2006 for €1.04bn.

Continue browsing industry reports, publications, conferences, blogs and more on Preqin Insights