Preqin Research shows North American private equity-backed buyout investment totalled $48bn during the first quarter of 2014, up from the $32bn worth of investment seen in the final quarter of 2013.

An increased level of global private equity backed buyout investment over the previous two quarters has been primarily brought about by strong investment activity in North America. A total of 672 private equity-backed buyout investments were made globally in Q1 2014 totalling $79bn in value, compared to 769 investments valued at $61bn in Q4 2013. While Asia deal flow remained buoyant, activity in Europe saw a notable drop in the value of deals being announced compared to Q4 2013; however, the $16bn worth of European investments was almost a 12% increase on the aggregate value of deals in the same quarter in 2013.

Private Equity

Private equity-backed exit flow has declined noticeably, however, with 302 exits valued at $88bn in Q1 2014 compared to 394 exits valued at $93bn in Q4 2013.

Private Equity

Other Key Facts on Private Equity-Backed Buyout Deals:

  • The aggregate value of European buyout deals in Q1 2014, at $16bn, was 9% lower than it was for deals in Q4 2013. All other regions saw an increase in the aggregate value of deals between the two quarters.
  • Buyout deal flow in Asia was up, with $13bn worth of deals in Q1 2014 compared to $9bn in Q4 2013 and just $4bn in Q1 2013.
  • 40% of all buyout deals in Q1 2014 were leveraged buyouts, and these accounted for 54% of the aggregate value of global deals in Q1 2014. In the first quarter of 2013, these deals accounted for the same proportion, but 73% of the aggregate value of global deals.
  • Total private equity buyout dry powder available to fund managers globally to invest in opportunities currently stands at $413bn, up from $354bn at the start of 2013.
  • The industrials sector was again the most prominent sector in terms of the number of investments, accounting for 22% of all deals in Q1 2014. The consumer & retail sector accounted for the largest proportion of capital invested in Q1 2014 of any sector at 22%.
  • The largest private equity-backed buyout deal this quarter was the announced $9.4bn acquisition of Safeway Inc. (NYSE:SWY) led by Cerberus Capital Management.

Private Equity

For more information and analysis, please see the factsheet that follows.

Comment:

“The private equity-backed buyout market continues to grow, especially in North America, as successive quarterly figures demonstrate this. While competition for deals remains very high, and there are concerns that assets are overpriced, private equity firms are demonstrating the continued ability to deploy institutional capital. With high levels of buyout dry powder, and intense competition among private equity firms for investment opportunities, it may prove challenging to maintain this level of investment, but the signs are so far encouraging for 2014.”

Ignatius Fogarty – Head of Private Equity Products, Preqin