Private equity ends 2020 on a high

PE value in 2020 rose year on year, demonstrating resilience in the face of the COVID-19 pandemic

Global private equity dealmaking continued its dramatic return to form in the fourth quarter, posting a strong finish to the year. Total deal value in Q4 came to US$336.5 billion, a 40% increase on the same quarter in 2019, while volume climbed 12% to 1,510 deals over the same period.

The robust performance in the second half of the year has allowed PE value across the year to rise above the total in 2019. PE deals totaled US$555.1 billion in value across 2020, a 5% rise on 2019, although volume over the same period fell 18% to 2,042 deals. This was a remarkable feat, considering the disruption caused by the COVID-19 pandemic and the sluggish levels of activity in the first half of the year, highlighting a resilience within the market as PE firms quickly adapted to their new reality.

Buyouts—both primary and secondary—were especially active in the last three months of the year, with 1,044 deals worth a total of US$211.3 billion, a 17% rise in volume on the previous quarter and a 33% increase in terms of value. This stands in contrast with exit value, which—after a strong Q3—saw value fall 22% quarter on quarter to US$182.3 billion, even as volume climbed 37% over the same period to 690 deals.

European payment activity heats up

The strong Q4 performance was boosted by healthy activity in Western Europe, especially at the top end of the market. Value rose 95% year on year to reach US$113.8 billion in the fourth quarter. Volume, on the other hand, fell 11% to 579 deals.

Globally, the largest private equity deal that quarter was US buyout firm Hellman & Friedman’s US$9.5 billion exit of Danish financial technology firm Nets to Italy’s Nexi. The all-stock deal comes just months after Nexi announced it had signed a memorandum of understanding to acquire fintech rival SIA Spa.

Nexi’s purchase is the latest in a string of deals within Europe’s fast-consolidating payment space. Earlier in 2020, Worldline purchased French rival Ingenico Group for US$10.1 billion, creating Europe’s largest payment service provider.

The pandemic has served to further increase demand within this already competitive industry, as consumers shifted towards online payment amid lockdowns. The increased demand makes the industry ripe for further PE activity in 2021, as European firms look to gain scale and ward off competition from larger US rivals.

Tech demand drives US recovery

As with overall M&A, US PE activity was particularly strong in the fourth quarter—delivering an impressive recovery compared to the first half of the year. Total private equity deal value rose 67% year on year to US$165.8 billion in the fourth quarter of 2020, even as volume dropped 11% to 597 transactions.

Much of this total was boosted by big-ticket technology, media, and telecom (TMT) deals. The largest of these was PE firm Thoma Bravo’s US$9.5 billion acquisition of property management software firm RealPage.

The second-largest US transaction was the US$8.1 billion secondary buyout of internet service provider Astound Broadband by Stonepeak Infrastructure Partners. The deal represents an exit for PE firm TPG and Patriot Media Consulting, which formed Astound after acquiring and combining RCN Telecom Services LLC (acquired in 2016), Grande Communications (acquired in 2016), Wave Broadband (acquired in 2017) and enTouch Systems (acquired in 2020).

The broadband industry has benefited from stay-at-home orders. According to the OECD, some operators experienced as much as a 60% increase in internet traffic compared to before the crisis hit. The demand for greater connectivity and improved bandwidth is set to fuel further investment in this fast-growing sector.

Retail firms attract attention

When looking across sectors, TMT, business services and pharma, medical and biotech all performed well despite the pandemic, in line with overall M&A activity, with each posting year-on-year value increases.

More surprisingly—due to the challenges the sector experienced in 2020—the consumer sector posted an annual 95% rise in PE transaction value, reaching US$33.7 billion in Q4.

This annual increase was due in large part to the sale of UK supermarket chain ASDA to a consortium consisting of PE firm TDR Capital and two billionaire brothers, Zuber and Mohsin Issa, for US$8.8 billion. Supermarkets have been one of the few areas within the sector that experienced growth amid the pandemic. ASDA achieved record online sales in Q2, as grocery sales spiked during lockdown.

Aside from the ASDA deal, there were five additional US$1 billion-plus PE-related deals in the consumer sector announced in Q4. These include the US$2.1 billion sale of high-end streetwear firm Supreme by Goode Partners and The Carlyle Group to VF Corporation, the owner of clothing brands JanSport, Timberland and North Face.

Sometimes called the “Chanel of Streetwear,” Supreme performed well despite the pandemic, boosted by a strong online presence and favorable operating margins. According to VF’s chief executive, Steve Rendle, the COVID-era has prompted a “casualization” of fashion, and an increased desire among consumers to engage with a brand’s meaning.

The streetwear market is expected to see double-digit sales growth over the next four years, marking it as a high-growth area for PE firms to capitalize on.

China-related delistings trend may continue through 2021

Chinese PE value ticked up by 2% year on year to US$57.1 billion in total in 2020 and volume slipped by three deals from 163 in 2019 to 160 in 2020. Buyouts (both primary and secondary) were especially active, value leapt up by 39% to US$54.6 billion. Volume increased by 18% to 146 transactions from 2019 to 2020.

The largest Chinese PE deal of the year saw a consortium of Ocean Link Partners, Warburg Pincus and General Atlantic buy online classifieds portal for US$7.6 billion and delist the company from the New York Stock Exchange.

The largest buyout of the fourth quarter was a US$2.4 billion PIPE investment into LONGi Green Energy Technology by Hillhouse Capital Management, a Chinese PE firm. The deal is for a 6% share of the Shanghai Stock Exchange-listed solar panel manufacturer.


The yearly increase in private equity deal value seen in the fourth quarter—both among buyout and exit deals—shows that while the global PE market was hit hard by the initial effects of the pandemic, the market has shown resilience, with deal values quickly returning to pre-pandemic levels over the course of the year.

The resurgence of exit deal value in the second half of 2020 highlights a renewed faith in PE dealmaking as valuations, aided by government stimulus packages and central bank measures, remained robust.

While the increase in buyout deal value was more modest than exits, signs point to a further pick-up in activity in 2021, as record levels of dry powder, low-cost debt financing and a vaccine-led global economic recovery are set to create favorable investment conditions.

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