According to Preqin’s Buyout Deals Analyst online service, the first half of 2015 saw 1,616 private equity-backed buyout transactions, the lowest recorded half-yearly number of deals in the buyout sphere since H1 2010. However, the aggregate deal value equates to $199bn, which is the largest semi-annual deal value recorded since H2 2007. This high figure can be in part attributed to the 44 large cap deals that took place in H1 2015, which is the second highest semi-annual quantity of such transactions (surpassed only by 45 large cap deals in H2 2012) since before the global financial crisis, with the second half of 2007 witnessing 53 such investments. As a result, the average deal value for H1 2015 is $537mn, the highest recorded half-yearly average value for buyout deals since H1 2007.
The industry that experienced the largest amount of deals in H1 2015 is the industrials sector, which saw 384 transactions valued at $19bn. $3.6bn of this came from the add-on acquisition of Norbert Dentressangle by XPO Logistics, a portfolio company of Jacobs Private Equity, announced in April 2015. Information technology saw the second largest number of buyouts (280), followed by the business services sector (227). The industry with the highest aggregate deal value is the food & agriculture sector, with deals worth $45bn – 22% of the total aggregate deal value in H1 2015. However, it must be noted that $40bn of the aggregate $45bn came from only one deal: the mega-merger of H.J. Heinz Company, a portfolio company of Berkshire Hathaway, 3G Capital and Kraft Foods Group.
Looking at buyout deals by geography, it is notable that the US hosted 874 private equity-backed buyout deals – 54% of the total number of private equity-backed buyout transactions in H1 2015 – with $111bn (56% of the global total) invested in the region. Conversely, the appetite for private equity-backed buyouts in China has decreased significantly, with only 27 recorded private equity-backed buyout transactions in the first half of the year, compared with 54 in H1 2014. This is likely a key reason for the drop in Asia-based buyout deal value for H1 2015, as shown in the chart above.
Preqin’s Buyout Deals Analyst recorded 761 exits in H1 2015, accounting for an aggregate exit value of $220bn. This is a 7% decrease in terms of the number of exits and an 8% decrease in terms of aggregate exit value on the figures seen in the first half of 2014. As expected, the US dominates the geographic breakdown in terms of both the number and aggregate value of exits as a proportion of the global total, accounting for 41% and 48% respectively in H1 2015. Private equity-backed exits from investments in China-based companies, at 42 exits, were the third most numerous and accounted for 6% of the global total, a contrast to the low level of deals seen above. The largest private equity-backed exit recorded in H1 2015 was the acquisition and subsequent merger of NXP Semiconductors with private equity-backed Freescale Semiconductor. The transaction is expected to close in H2 2015 and values the latter company at $16.7bn, including debt.