Global PE buyout activity stays relatively robust in H1

Amidst the COVID-19 pandemic, total buyout volume in the first half of 2020 dropped 23% annually, while value fell 30%—less than half the rate of decline of overall M&A

Private equity buyout activity, especially primary buyouts, remained relatively strong across the first six months of 2020. Against a global M&A landscape which saw H1 volume fall 49% on the previous year and value drop 69% over the same period, PE buyout volume (both primary and secondary) dropped by only 28% to 1,335 transactions. Total buyout value, meanwhile, dropped 30% to US$211 billion over that period.

As the likely extent of the economic effects of the COVID-19 pandemic were unknown in the first few months of 2020, most of the H1 decline took place in the second quarter. Between Q4 2019 and Q1 2020, volume dropped a mere 8% (from 889 deals to 819), while value dropped 19% (from US$162.76 billion to US$131.72 billion). Between Q1 2020 and Q2, volume dropped 37% (from 819 deals to 516), and value plummeted 40% (from US$131.72 billion to US$79.25 billion).

Looking only at primary buyouts, the rate of decline was even less steep—volume fell by 23% and value by 28% compared to H1 2019, coming to a total of 1,136 deals worth US$94.4 billion in H1.

Exits fared a lot worse than buyouts, on the other hand. There were 581 trade exits in H1, a 33% annual drop. Value came to US$66.1 billion, 57% below the year before.

Across all deal types, PE volume fell 30% to 1,916 deals, while value fell 41% to US$301.8 billion.

Corporate carve-outs

The largest PE deal of the year has been a corporate carve-out—German industrial group ThyssenKrupp’s US$18.8 billion sale of its elevator business to a consortium comprising Cinven, Advent and RAG-Stiftung. The deal, announced at the end of February, is pending approval from merger control authorities.

Although the ThyssenKrupp transaction was struck before the extent of the COVID-19 crisis in Europe was evident, it could set a template for the type of deals that could prove resilient in coming months. Economic pressures on companies could encourage strategic reviews and disposals, and with high levels of capital to deploy, PE could be in a good position to take advantage.

The second-largest PE deal of the year is an example of another type of PE investment in a large company’s assets. The deal—the largest of Q2—was Abu Dhabi National Oil Company (ADNOC)’s sale of a 49% stake in its pipeline assets to a consortium led by Global Infrastructure Partners for US$10.1 billion.

The deal, announced in late June, is the latest in a series of stake sales ADNOC has made in recent years, as Abu Dhabi seeks to diversify away from carbon-intensive assets. The pandemic’s effect on energy commodity prices could accelerate the decarbonization trend around the world, especially as infra funds and other private capital funds are still flush with historic levels of dry powder they must deploy.

Exit activity

The largest exit in 2020 so far was French rail equipment firm Alstom’s acquisition of Bombardier Transportation from Canadian industrial group Bombardier and Caisse de Depot et Placement du Quebec (CDPQ). Announced in mid-February, the deal is pending approval by regulators and works councils.

The first half of 2020 also saw a number of high-profile trade exits of venture capital-backed financial technology firms. US-based business software firm Intuit acquired online credit monitoring service Credit Karma for US$7.1 billion, for example, while Visa bought Plaid Technologies, a tech platform that enables applications to connect to bank accounts, for US$5.3 billion.

TMT PE activity boosted by Chinese take-privates

The TMT sector had the highest number of PE-related transactions of any sector in the first half, as well as the largest total deal value. There were 667 TMT deals (across all deal types), worth US$112.7 billion. Although this represented a decline of 19% and 14% respectively compared to the previous year, this was still well above total volume and value for any other sector.

The largest PE deal in the TMT sector this year is the take-private of New York-listed Chinese online classifieds portal, which valued the company at an equity value of US$8.4 billion. The deal is part of a trend of US-listed Chinese firms going private. While this trend is not new, it may be accelerated by growing tensions between China and the US.

With many Chinese companies’ valuations hit by the pandemic, PE firms may see opportunity. Earlier in the month, a consortium formed by Tencent Holdings and Hammer Capital Opportunities Fund made a US$504 million non-binding bid for 44.36% of Bitauto Holdings, a Chinese online auto trading firm. Tencent, the Chinese internet giant, teamed up with PE firms for another deal, a US$2.4 billion investment in online real estate platform Tianjin Xiaowu back in March.

Asia PE value bounces back in Q2

The take-private trend among US-listed Chinese companies helped ensure that Asian PE activity dropped by only 19% in terms of volume and 27% in terms of value, compared to the overall decline of 30% and 41%, respectively, in global PE activity.

Asian PE activity was especially strong in the second quarter, relative to other regions. Total value in Q2 was US$31.9 billion, higher than any other region that quarter, and a 48% increase quarter on quarter. Volume, meanwhile, dropped 21% over that period, to 122 transactions.

In contrast, North America, which usually registers the highest levels of PE value, saw US$29 billion worth of deals in Q2, an annual fall of 79%. Volume dropped 55% over the same period, to 293 deals.


Although much remains uncertain going into H2—with the COVID-19 pandemic continuing to spread in some regions and the possibility of a second wave later in the year even for countries that have brought down their case numbers—PE activity could be set for recovery.

With massive levels of dry powder to deploy—US$1.5 trillion as of June 2019, according to research firm Preqin—PE firms are in a better position to transact than many corporations. And with the COVID crisis pushing down valuations, PE firms could be well positioned to find bargains, although exit activity could remain subdued.

Even looking at the second quarter, there are signs of green shoots for PE. After dropping to 186 deals worth US$16.9 billion in PE activity in April—the lowest monthly volume total since January 2009 and the lowest value since July 2009—May witnessed a slight recovery. Deal volume rose 42% and value 93% in April to 265 deals worth US$32.6 billion. And although deal count fell slightly in June, value rose again, by 67%, to US$54.5 billion.

While the record levels of activity of recent years may not be topped soon, the role of PE in overall M&A activity could become larger than ever.

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