Private equity breaks 40-year record with $500bn deals

Private equity firms have had their busiest six months since the start of records four decades ago, entering into transactions worth more than $ 500 billion and bringing global mergers and acquisitions to an everyday high.

Buy-out groups have announced 6,298 transactions since the beginning of January, worth $ 513 billion, even before A $ 34 billion mega-deal for medical supply company Medline, the strongest half-year result since at least 1980, according to figures from data provider Refinitiv.

The larger transactions with corporate enterprises continued at a furious pace, with total transaction volumes peaking at $ 1.5 ton this quarter, the fourth consecutive quarter in which there has been a significant upswing since the early days of the pandemic. in the activity of $ 1 ton.

‘The level of operating activity is far above our expectations [last year], ”Said Cathal Deasy, global co-head of M&A at Credit Suisse.

Companies have achieved $ 2.8 tons in transactions since the beginning of January, with a record 129 percent over the same period last year, according to the figures, with offers including WarnerMedia. combination with Discovery to create a power business of about $ 135 billion.

“The transactions we are seeing are of the highest quality,” said Alison Harding-Jones, head of Europe, the Middle East and Africa’s M&A head of Citigroup.

‘Some of them are reorganizing companies in response to Covid, and others are using the reseller market. There may be an element of people who think, will the environment be so good in six months? ”

Investment banks incurred some of their highest fees ever during the transaction frenzy. Total M&A fees reached $ 17.9 billion in the first half of this year, the highest since records began in 2000.

Private equity expanded its share of total transaction volumes to 18 percent in the first half of the year when it invested with record-breaking funds following a slowdown at the start of the pandemic.

Blackstone was involved in three of the ten largest private equity firms that Refinitiv counted, including the Acquisition of € 9.3 billion of Atlantia’s toll road business with Macquarie Group and the Italian state-owned Cassa Depositi e Prestiti of Atlantia.

It was also agreed that the American medical stock company Medline in a $ 34 billion transaction along with Carlyle and Hellman & Friedman, which indicate the yield of large consortium transactions, although the Refinitiv figures do not include it because the financial terms of the transaction were not disclosed.

“We have been quite active in deploying capital and withdrawing investments this year,” said Jon Gray, Blackstone’s president and chief operating officer. Although asset prices “are certainly not cheap”, the company has benefited from low interest rates and was buying companies that benefit from ‘long-term winds’.

‘We believe in the migration of almost everything online, the revolution in life sciences, the shift to sustainable energy, a shortage of housing since the global financial crisis, the global recovery of travel and the continued rise of the middle class in China and India , ”He said. Rising inflation was ‘the biggest risk on the investment horizon’, he added.

Source: Afegames