Since 2006, portfolio companies have received $1.8tn via 632 private equity-backed transactions with a deal value of $1bn or more, also known as a large cap deals. Leveraged buyouts (LBOs) have commanded the majority (58%) of all large cap transactions, with 369 private equity-backed buyout deals through this traditional private equity investment approach. In the same period there were 171 public-to-private deals accounting for 27% of all private equity-backed investments valued at $1bn or more.
According to Preqin’s Buyout Deals Analyst, H1 2014 witnessed 29 LBO deals with a transaction value at or over $1bn. This is the highest quantity of such transactions since before the global financial crisis, with the first half of 2007 experiencing 48 large cap LBOs. Furthermore, large cap deals accounted for 15% of the number of all LBO transactions in H1 2014 - the highest semi-annual proportion that such deals accounted for as a percentage of all LBOs since 2006. In terms of the aggregate deal value, H1 2014 LBOs made up 71% of the $86.8bn invested through large cap transactions, 24 percentage points behind the peak seen in H2 2008.
Of the $61.7bn invested via a large cap LBO in H1 2014, $5.4bn is from Blackstone Group’s acquisition of Gates Global, Inc. from Tomkins plc, which is in turn private equity-backed by CPP Investment Board and Onex Corporation. Announced in April 2014, and completed earlier this month, Blackstone invested $1.6bn of its own funds in the LBO of the manufacturing company.
Breaking large cap LBOs down by sector, business services commanded 27% of the total value of such transactions in H1 2014, with $15.8bn invested in large cap LBOs in the industry; Kohlberg Kravis Roberts’ acquisition of First Data contributed $3.5bn to this figure. Second to business services is Industrials, accounting for 24% of the aggregate value of large cap LBOs in H1 2014, slightly higher than the average commitment of 22% from the period 2006-2014YTD.
In terms of location, unsurprisingly, North America has accounted for 55% of the number of all private equity-backed large cap LBOs in H1 2014 with $40bn (63% of the global total) invested in the region. Portfolio companies in Western Europe have committed over a third (34%) to total number of large cap LBOs, an increase of 11 percentage points on H2 2013.