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Laxman Pai, Opalesque Asia: After marking new record highs in 2021, with completed deals worth $1 trillion, capping a stunning 12-year long upcycle for the global private equity industry, 2022's sudden mid-year break in PE activity saw global buyout value (excluding add-ons) drop steeply, by 35%, to $654bln last year.
Bain & Company's 14th annual Global Private Equity Report said that given the heights from which they fell, buyout deal value ($654 billion), exits ($565 billion), and fund-raising ($347 billion) all finished 2022 with respectable totals in a historical context.
But the sudden reversal marked the end of an upcycle that has endured (with a brief Covid brake tap) since 2010 when the industry emerged from the global financial crisis and produced a 12-year run of stunning performance.
"Private equity managed to post its second-best year ever in 2022, riding a wave of momentum coming off the industry's record-breaking performance in 2021. But spiking interest rates caused a sharp decline in deals, exits, and fund-raising during the year's second half, almost certainly signaling a turn in the cycle," the report explained.
While this environment will challenge GPs to find new ways to create value and underwrite risk, the long-term outlook for private equity remains fundamentally sound.
For the first six months of 2022, the industry extended 2021's record-shattering burst of deal activity, despite persistent inflation, the invasion of Ukrain...................... To view our full article Click here
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