Preqin’s analysis of private equity-backed buyout deal activity shows that when combining portfolio company location and primary industry, there have been 54 investments in the US manufacturing sector in the year to date, making this the most popular area for investment globally. Each of the next 13 most popular location and industry combinations are based in the US and cover a range of activities from software through to pharmaceuticals businesses, highlighting the extent of the US’ prominence in the private equity deal space.
Preqin’s Buyout Deals Analyst shows that there have been 12 investments in UK-based financial services companies in 2014 thus far, putting this sector on par with the US consumer products and medical technologies industries. The remainder of the top 50 sectors in terms of number of private equity-backed buyout deals is largely comprised of US- and UK-based industry groups, although the Canadian oil & gas industry and financial services sector in India both feature.
Despite the US manufacturing sector’s dominance in 2014 to date, the industry was more severely impacted by the financial crisis than many others, with a 53% drop in the number of deals from 2006 to 2009. A subsequent 71% increase in deal flow in this sector from 2009-2013 still left deal volumes below their 2006 level by 19%. In contrast, investment in US medical instruments companies was seemingly unaffected, with no change in deal flow in 2009 compared to 2006 and 2013 volumes standing 333% higher than 2006 (and 2009) levels.
In terms of aggregate value, US manufacturing again proved to be the biggest draw for private equity investment, with $11.5bn of deals so far this year. As with the number of deals, the aggregate value of investment was severely impacted by the financial crisis, with a 90% fall between 2006 and 2009. A 94% rise in aggregate value to $3.5bn in 2013 followed, yet the 2013 figure is still 80% lower than the total value of US manufacturing deals in 2006. It is interesting to note that the list of top 50 sectors by aggregate value of deals in 2014 contains far more non-US sectors than the top 50 by number. Large investments in Singapore’s logistics industry, Denmark’s financial services sector and China’s gaming industry have made these the 10th, 11th and 12th most significant sectors globally by aggregate value of deals in 2014.