Preqin: Pace Of PE-Backed Deals Slows In First Quarter Of 2017

Apr 5 2017 | 4:48pm ET

Private equity-backed buyout deal activity fell sharply in the first quarter of 2017, according to new data from Preqin, with 970 transactions announced for an aggregate $53 billion compared with 1,058 financings worth a combined $89 billion in the preceding period.

Preqin expects these figures to rise by around 5% as further information becomes available, the company said in a statement, but the level of activity is on par with Q1 2016, which also saw widespread concerns about a slowing pace of deals.

Significantly more buyout transactions were completed in North America than to Europe, but both regions recorded a similar aggregate value of investment - $25 billion and $20 billion, respectively, Preqin’s research revealed, while four of the 10 largest deals of the quarter were for European assets. The Asian market also saw an uptick in buyout deal activity following a similarly disappointing 2016, with deal value in the region equaling $7 billion in the first quarter, better than three of four quarters last year.

Other highlights from Preqin’s First-quarter PE-Backed Buyout Deals and Exits Factsheet: 

  • Despite just 7% of buyout deals being worth $1 billion or more, large-cap financings accounted for 57% of the 
aggregate deal value. 

  • The largest buyout-backed deal recorded in Q1 was Blackstone’s $4.8 billion acquisition of Aon Corporation’s 
Employee Benefits Outsourcing Unit. 

  • The private equity buyout-backed exit environment also saw a drop off in activity in Q1, with 394 exits occurring 
for a combined value of $48 billion, down from the total exit value of $93 billion seen in the previous quarter. 

  • Trade sales continue to represent the most common method of exit, accounting for almost two-thirds (63%) of the 
combined exit value, while IPOs account for 20%, up seven percentage points from 2016. 

  • Onex Corporation’s $4.3 billion sale of USI Holdings Corporation to KKR and CDPQ marked the largest private 
equity buyout-backed exit in Q1 2017.

“The private equity buyout market saw a marked slowdown in both deal and exit activity in the first quarter of 2017, as managers struggled to navigate a market of intense competition and high valuations,” commented Christopher Elvin, Head of Private Equity Products for Preqin, in the statement. “However, private equity fund managers will note that the total value of buyout investment has surpassed Q1 2016, which was the slowest quarter of that year. They may be hoping for a similar pattern in deal flow this year, especially as the majority of firms stated that they intended to up their investment over the course of 2017.” 

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 40,000 professionals in 90 nations use the company’s products.

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