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By:Darragh Byrne, Germaine Nicole Gurr, Arlene Arin Hahn, Tzi-Yang Seow

Last spring, Dell spun off its cloud computing business, VMWare, in a deal valued at nearly US$63 billion, with the equity from the deal funneled to existing shareholders including Dell itself and the PE firm Silver Lake Partners, Dell's strategic financial partner since 2013.

The unconventional Dell deal serves as a bellwether for surging PE carve-out activity, and for increasingly out-of-the-box dealmaking.

Corporate divestitures to PE have boomed over the past 12 months. Following the market pause in Q2 2020, such deals spiked to highs not seen for at least four years.

H2 2020 witnessed US$254 billion in private equity carve-outs, according to data from Dealogic. The momentum carried over into 2021: In H1, US$281.1 billion in such deals was recorded, a 197% year-on-year increase. The numbers reveal a rise in deals at the top end of the market, as volume of 436 deals in H1 2021 was only a 12% rise on H1 2020-and a drop on the 520 transactions struck in the second half of 2020.

The Dell VMWare deal-though unusual in many ways-exemplified the strength of the US market for PE carve-outs. US-based deals were responsible for US$133.5 billion of deal value, nearly half of the global total.

Fit for repurpose

The pandemic forced many companies to issue debt in 2020 to raise cash to see them through the worst. Now many are reassessing their core business models and competencies ......................

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