The opening quarter of 2015 has seen the highest quarterly value of private equity-backed buyout deals since Q3 2007, led by the merger between Kraft Foods and H.J. Heinz. The total value of buyout deals in Q1 2015 reached $97bn, the highest amount since $125bn worth of deals in the third quarter of 2007. Despite the active opening quarter of the year, buyout fund managers worldwide still have $456bn in dry powder (unspent capital commitments) available to deploy in new deals, up from $431bn at the start of the year.

Private Equity-Backed Buyout

Private Equity-Backed Buyout

Other Key Private Equity-Backed Buyout Market Facts:

  • The first quarter of 2015 has seen 770 private equity-backed buyout deals globally, valued at a total of $97bn. These figures represent a fall of 20% in number but a 14% rise in aggregate value from the previous quarter, when 958 deals were recorded with an aggregate value of $85bn.
  • Similarly, a comparison against the first quarter of 2014 shows that Q1 2015 has seen 6% fewer deals valued at 14% more than the corresponding quarter last year.
  • North America witnessed a rise of 86% in aggregate value since last quarter, to $69bn, with the number of deals in the region falling 18% from 545 in Q4 2014 to 449 this quarter.
  • Europe saw a similar fall in number of deals, dropping 19% to 233, but registered a more significant 43% fall in aggregate value of deals, with $17.0bn in Q1 2015.
  • As a result of the mega-sized merger between H.J. Heinz and Kraft Foods, add-ons (which include merger deals) were the most prominent investment type by aggregate value, accounting for 53% of the global total in Q1 2015.
  • Add-on deals also accounted for 39% of all private equity-backed deals in Q1 2015 – the first quarter in the period 2006-present in which the number of add-on deals has surpassed the number of leveraged buyouts.
  • The merger of H.J. Heinz and Kraft Foods Group also had a large impact on the breakdown of investments by industry, with the food & agriculture sector representing 42% of the aggregate deal value in Q1, despite accounting for just 5% of all deals.

Private Equity-Backed Buyout

Private Equity-Backed Buyout

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

Comment:

“The merger between H.J. Heinz and Kraft Foods last month is the largest buyout deal since Energy Future Holdings was purchased for $45bn in February 2007. This marks a period of growing levels of private equity investment, with 2014 recording the highest annual value of buyout transactions since the financial crisis, and Q1 2015 seeing the highest aggregate value of deals since Q3 2007. In addition, more add-on (and merger) deals took place than traditional leveraged buyout investments for the first time in any quarter. Private equity fund managers are evidently finding greater value in combining portfolio companies within certain sectors, particularly as the global economy begins to stabilize and competition intensifies within specific markets.”

Christopher Elvin – Head of Private Equity Products, Preqin

Private Equity-Backed Buyout