According to Preqin, August saw the largest private equity-backed buyout investment as well as the largest exit occur across the whole of 2014 to date. The add-on deal by 3G Capital, combining their current investment in Burger King Worldwide Inc (NYSE:BKW) with that of Canada based Tim Hortons Inc. (NYSE:THI) (TSE:THI) for $11.5bn, is the largest private equity deal in 2014. In addition to this, the trade sale of Alliance Boots GmbH by a consortium of private equity fund managers for $15bn registered as the largest private equity-backed buyout exit so far this year.
Private Equity-Backed Buyout Deal and Exit : Other Key Facts
- The third quarter of 2014 has seen a lower number of deals than in the previous quarter, falling from 816 in Q2 to 778 in Q3. However, the aggregate deal value in Q3, $83bn, was up compared to $81bn in Q2.
- The make-up of deals by value band shows a relative strengthening in the mid-market, with deals in the $250-999mn bracket accounting for 29% of all deals in Q3 2014, compared to 25% in Q2 2014.
- Add-on activity as a proportion of the number of deals and aggregate deal value was higher at 36% and 27% respectively, compared to 33% and 12% respectively in Q2 2014, notably impacted by the Burger King/Tim Hortons deal.
- Q3 2014 saw the highest number of secondary buyouts in the period since 2006, with 130 portfolio companies being sold to another private equity investor.
- Q3 2014 has seen an increase in the aggregate value of deals in North America compared to the previous quarter, up from $41bn in Q2 to $51bn in Q3.
- The aggregate value of buyout deals in Asia was up, with $12bn worth of deals in Q3 2014 compared to $8.9bn in Q2 2014.
- North America witnessed 6 of the 10 largest private equity-backed buyout deals this quarter, followed by China and Europe with 2 apiece.
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“Although the third quarter has seen a drop in the number of private equity-backed buyout deals overall, and an even more pronounced drop in exit activity following the strong IPO environment in the second quarter, the summer of 2014 witnessed both the largest buyout investment and exit across the whole of the year so far. Furthermore, with buyout investment activity typically picking up in Q4 as firms look to finalize deals before the end of the year, and with over $460bn in dry powder available to private equity firms for investment in buyout opportunities, the last quarter of the year is set to be an active period of buyout investment.”
Christopher Elvin – Head of Private Equity Products, Preqin