Private equity activity is set to pick up speed in the next 12 months aided by near-term increase in buyout activity and improved fund raising prospects in the next year, notes the inaugural Global Private Equity Outlook study.

The report titled “Global Private Equity Outlook” based on a study jointly commissioned by Duff & Phelps and Shearman & Sterling LLP, in association with Mergermarket, paints an optimistic outlook for private equity activity over the next 12 months.

Enhanced investment opportunities in growth equity

The report highlights that despite private equity firms have been traditionally focused on buyouts, in recent years several firms have been finding increased investment opportunities in growth equity. These investments are often made in companies having substantial growth prospects with potential for outsized returns.

The following graph depicts the growing opportunities offered by growth equity:

Private Equity Top-transaction-types

Focusing on opportunities in various sectors, the report points out that thanks to its relative stability throughout economic cycles, the consumer sector provides best opportunities for private equity. The respondents to the survey also anticipate that the technology, media and telecommunications (TMT) sector to offer some of the best opportunities for private equity, as interest in the sector is driven by technology investments. Citing a US-based partner, the report highlights that the need for TMT exists in every industry given the enhanced need for data and mobile devices in sectors that range from financial services to healthcare. The following graph sets forth sectors providing the best opportunities:

Private equity Sectors providing best opportunities

Private equity cross-border buyouts to the fore

Mirroring the attractive investment opportunities across the globe, on average, cross-border transactions are anticipated to make up 30% of survey respondents’ acquisitions over the next 12 months. As can be deduced from the following table, year-to-date, there have been 331 cross-border buyouts worth $10 billion and 310 exits worth $115 billion:

Cross-border activity

The report highlights that thanks to strong IPO market and with both corporate buyers and private equity flush with cash, exit opportunities have risen. The following table captures the global exit activity:

Global exit activity

Some of the mega deals such as Sequoia Capital’s $16 billion sale of WhatsApp to Facebook Inc (NASDAQ:FB) and the $13 billion sale of Biomet to Zimmer Holdings, Inc. (NYSE:ZMH) by a private equity consortium have buoyed up this year’s numbers.

The report suggests successful private equity firms have to remain agile and diligent of the emerging factors to derive successful outcomes in the ever-changing investment climate.