Asia sees a spike in buyout deal activity, including largest Asia-focused buyout deal ever
The private equity-backed buyout industry saw Q3 2017 deal activity on par with that of the previous quarter, as 953 deals were announced worth an aggregate $92bn. Preqin expects these figures to rise by around 5% as more information becomes available. Although deal value in Q1 2017 was the lowest since 2012, due to the strong deal activity in Q2 and Q3, it looks as though 2017 as a whole remains on course to record aggregate deal values similar to 2016. Aggregate deal value in Asia has increased, and is around $3bn less than that of North America buyout deal value. The jump in Asia deal value is mostly due to the two largest deals being announced in the region, worth a combined $30bn.
Prescience Partners returned 6.75% for the second quarter, underperforming the S&P 500's 8.55% return but coming out ahead of the Barclay Equity Long/ Short Index's 2.62% return. However, for the first six months of the year, Prescience is up 30.66%, doubling the S&P's 15.25% return and smashing the Barclay Equity Long/ Short Index's 9.27% return. Read More
Key Q3 Buyout Deals and Exits Facts:
- Q3 2017 saw 953 deals announced with an aggregate value of $92bn. This is an increase from Q2 which saw 1,047 deals announced with an aggregate value of $93bn.
- North America represented the largest proportion of buyout deal activity and saw 513 deals announced worth $36bn. Europe recorded 350 deals worth $20bn, and Asia recorded 39 deals worth $32bn.
- However, North America saw the largest decrease in deal activity from Q2, as aggregate deal value dropped from $62bn last quarter.
- By contrast, Asia buyout deal value jumped from $9bn in Q2 2017 to $32bn in Q3.
- This jump can be accredited to the two deals: the Global Logistic Properties Limited deal worth SGD 16bn ($12bn), and the Toshiba Memory Corporation deal worth JPY 2,000bn ($18bn) - the largest Asia-focused buyout deal ever.
- Although public-to-private deals only represented 1% of financings announced this quarter, it represented 26% of aggregate deal value.
- Industrials represented the largest proportion of number of deals at 22%, while information technology represented the largest proportion of aggregate deal value at 35%.
- Private equity buyout-backed exit activity fell for the fifth consecutive quarter, as 381 exits were recorded worth $65bn.
- North America saw 182 exits with an aggregate exit value of $35bn while Europe saw 152 exits worth $20bn.
- Trade sales accounted for over half (59%) of exits and over two-thirds (68%) of the exit value.
- The largest private equity-backed exit announced this quarter was the trade sale by the portfolio company Lightower which was acquired by CCIC for $7.1bn.
Christopher Elvin, Head of Private Equity Products:
“Not only did the private equity-backed buyout industry match the deal activity of Q2, aggregate deal value also increased by $37bn from Q1. Assuming that the industry is able to maintain its momentum into the last quarter of the year, annual deal activity in 2017 should be on par with the levels seen the year before.
Europe continues to see a slowdown in buyout deal activity in the quarter, but North America saw the steepest decline. By contrast, with the Toshiba Memory Corporation buyout deal announced this quarter worth close to $18bn, Asia buyout deal activity saw a sharp spike in deal value, although the number of deals decreased slightly. For deal activity to match the successes of previous years, buyout deal activity will have to pick up across all regions.”
Article by Preqin