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Private Equity Strategies

PE-Backed Buyout Exits Jump in Q2

Wednesday, July 23, 2014

A study by data provider Preqin showed the value of private equity-backed buyout exits in the second quarter of 2014 saw a notable jump up from Q1 2014, with 392 exits valued at $138bn in Q2 2014 compared to 331 exits valued at $90bn in the first quarter. This is the highest quarterly exit value for any quarter in the period since the financial crisis, and the second highest number of exits in the same period, behind Q4 2013 which registered 405 exits.

Christopher Elvin, head of private equity products at Preqin commented, "The growing stability of economies and markets around the world is having a positive impact on the exit environment for the private equity industry. Private equity firms selling their stakes in portfolio companies throughout the second quarter of the year have achieved the highest quarterly value in the post-crisis period."

He continued, "On the flip side, growing markets and higher competition are making it harder for private equity buyers, with deal flow falling over the past two quarters. As economies strengthen further, this should present even greater exit conditions for private equity firms to sell on companies, but may prove problematic for the industry to identify good value investment opportunities, especially in a period of strong fundraising and increasing dry powder levels."

According Preqin, the second quarter of 2014 saw a drop in deal flow, however, with a total of 743 private equity-backed buyout deals announced during the quarter valued at $78bn, compared to 733 deals valued at $82bn in Q1 2014. This represents a 1% rise in the number of deals yet a 5% drop in aggregate deal value.

Another Preqin study found study found that global venture capital investment activity has shown that the average value of Series D and later stage deals that occurred in H1 2014 was $64.1m, a significant increase on the average size of late stage deals done in 2013, which stood at $34.4m. The aggregate value of venture capital deals that took place in Q2 2014 was up 27% on the aggregate value of Q1 2014 deals, yet the number of venture capital financings was 1% lower.

Elvin said, "Companies towards the end of the venture capital financing cycle have received far larger investments on average over the first half of this year compared to recent years. In fact, all venture capital financing stages except growth stage/expansion have seen higher average values in H1 2014, as firms invested over $38bn in companies over the first two quarters of the year. Even though specific countries and regions, such as India, have seen a notable uptick in deals being made, the general trend across the world is that of static numbers of deals taking place over recent quarters."

 
This article was published in Opalesque's Private Equity Strategies our monthly research update on the global private equity landscape including all sectors and market caps.
Private Equity Strategies
Private Equity Strategies
Private Equity Strategies
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