There were 230 trade sale exits in Q3 2015, nearly matching the record 231 exits in Q4 2012, with a combined value of USD98.7 billion, the highest quarterly value on record according to figures release by Preqin.
This total is expected to increase further as more information comes to light, surpassing the previous record and making the quarter the busiest ever for private equity-backed trade sale activity. Trade sales have been the key driver of the private equity- backed exit market in Q3 2015, as the number of IPOs, sales to GP, and restructurings all fell.
Nonetheless, private equity-backed exit market as a whole contracted slightly in the third quarter of 2015, as 394 exits were completed, worth an aggregate USD116 billion. This is a decrease in both number and value from the previous quarter, when 413 exits occurred, worth a total of USD122 billion. However, it did mark the third consecutive quarter in which overall exit value exceeded USD100 billion, and so far this year USD340 billion-worth of exits have already occurred.
The number of private equity buyout fund-backed deals in Q3 was 874, slightly above the 834 in Q2. However, aggregate deal value fell 17 per cent, from USD102 billion in the second quarter of the year to USD85 billion in the third.
While aggregate deal value in North America fell from USD51.4 billion in Q2 to USD44.3 billion in Q3, Asia overtook Europe to be the second biggest region in this regard. 270 deals were completed in Europe, worth a total of USD17.5 billion, a 55 per cent decrease from Q2. At the same time, 59 deals were completed in Asia, worth an aggregate USD20.8 billion, an increase driven by several large deals in the region.
More LBO deals than add-ons were completed in the third quarter, accounting for 39 per cent and 37 per cent of the number of deals respectively, and reversing the trend of Q2. However, while add-ons represented just 11 per cent of the total value of deals, LBOs were 66 per cent, an increase of 27 percentage points from the previous quarter.
Despite just 9 per cent of all deals being classified as large cap (USD1 billion or more in value), these transactions accounted for 64 per cent of the total deal value globally in Q3 2015. Small-cap deals, those worth less than USD100mn, constituted 51 per cent of the deal flow, and 4 per cent of the aggregate deal value in the quarter.
Unspent capital available to buyout fund managers has continued to climb through the quarter, rising from USD467 billion at the end of June to USD483 billion at the end of September 2015.
The biggest transaction of the quarter was the acquisition of Veritas, the former data storage unit of Symantec, for USD8 billion by the Carlyle Group and GIC. Of the top 10 largest deals of the quarter, 6 were in North America, 3 in Asia, and only 1 in Europe.
The sale of SunGard Data Systems Inc. to FIS Global for USD9.1 billion was the biggest exit of the quarter. The company was acquired by a consortium of investors including Bain and KKR for USD11.4 billion in March 2005.
“The private equity-backed deals market has presented a mixed picture through the third quarter; record growth in Asia is balanced by stalling North American activity and tumbling European figures,” says Christopher Elvin, Head of Private Equity Products at Preqin. “Although dry powder levels have continued to climb, issues of valuation and competition that have preoccupied both managers and investors don’t seem to have materialised. While deal numbers have increased slightly, aggregate deal value has fallen below the USD100 billion mark reached in the first two quarters of the year.
“The number and aggregate value of exits made by portfolio companies backed by private equity buyout firms have also declined slightly from Q2. Exit numbers have been declining after record highs in 2014, and while aggregate value of exits had been increasing through H1 2015, it has not matched those levels in Q3.”
