The value of private equity transactions was sky high in the second half of 2015 as USD 298,166 million was invested, reaching its highest level for a six-month period since the first half of 2007. The result followed an impressive opening to the year, when USD 246,848 million was injected.
Despite the increase in value in the second half of 2015, volume actually declined on H1, sliding 4 per cent from 3,278 in the first half of the year to 3,157, according to Zephyr, the M&A database published by Bureau van Dijk. Despite the drop, volume was still higher than for any other six month stretch in the entire period under review, dating back to the beginning of 2006. 2016 has gotten off to a fairly slow start, in keeping with the overall trend for M&A transactions in the year to date. So far there have been 1,734 transactions worth a combined USD 124,906 million signed off in 2016. Based on these results, and if deal making continues on the same trajectory, value is unlikely to reach the heights achieved in H2 2015 and volume could decline for the second consecutive period. This is hardly a surprising development; many sectors have witnessed a drop in deal making at the beginning of 2016, but this was surely unavoidable given the considerable investment notched up in the second half of last year. Although aggregate values do not look likely to break any records come the end of June, we are also not likely to see figures plummet past the levels recorded in 2012 and 2011, or even further back.
As is often the case, there has still been some cause for cheer as private equity companies have continued to take part in high value transactions. The largest private equity deal signed off so far in 2016 is worth USD 11,943 million and took the form of an acquisition of US fire alarm and security systems services provider the ADT Corporation by Apollo Global Management, via its Prime Security Services Borrower vehicle. This deal alone accounts for almost 10 per cent of total private equity investment in the year to date. It is followed by a USD 9,374 million buyout of Australian freight logistics player Asciano by an investment consortium comprising Global Infrastructure Partners, Canada Pension Plan Investment Board, CIC Capital, GIC and British Columbia Investment. The parties are carrying out the deal via the Australian Logistics Acquisition Investments vehicle. Others targeted by PE firms since the beginning of January include Chinese logistics trading platform Cainiao Network Technology, mobile phone payment application developer Zhejiang Ant Small and Micro Financial Services Group and US laser and inkjet printer manufacturer Lexmark International.
North America has received the most investment from private equity firms so far in 2016. In all the region has been targeted in deals worth an aggregate USD 47,441 million, placing it well ahead of second-placed Western Europe, which notched up investment of USD 29,915 million, while the Far East and Central Asia came third with USD 25,812 million. The same three regions led the way by volume with 667, 520 and 386 deals, respectively. Given the fact that the largest private equity deal of 2016 to date featured a US target it is not surprising to see North America head up the rankings. Of the year’s top ten deals, three had a North American target. These three transactions have a combined value of USD 18,143 million, thereby accounting for 38 per cent of all North American private equity investment in 2016 and just under 15 per cent of all investment worldwide for the year to date.
It remains too early to say how 2016 is likely to shape up in terms of aggregate private equity investment value, but what is clear is that deal activity has been slow off the mark worldwide in 2016. Given the record year witnessed in 2015 it may be a bridge too far to expect similar levels again in 2016, but the fact that high value injections continue to be signed off will be encouraging for many.