Private equity is robust, despite high valuations

Buyout value stable amid fierce competition

In spite of high corporate spending power (as evidenced by the continued trend for megadeals by strategic buyers), private equity buyouts (primary and secondary) have remained extremely robust this year.

At US$398 billion, value has dipped only 1.8 percent year-on-year and is far ahead of all years from 2009 to 2013. Volume tells an even stronger story—there were 2,795 deals in 2016, ahead of all years since 2007.

Buyout activity in technology, media and telecommunications (TMT) has been particularly notable this year. Deal value in the sector has risen more or less constantly since 2009 and by almost 11 percent year-on-year to US$97.7 billion in 2016, outstripping US$87.6 billion in 2015.

Several multi-billion deals for Chinese firms have boosted the sector’s results so far this year. For example, a consortium of PE firms and corporates, including Apple, purchased a stake in mobile taxi booking service Didi Chuxing in May for US$4.5 billion—the biggest TMT buyout of the year so far.

Major deals outside the TMT arena include Hellman & Friedman’s US$7.5 billion acquisition of healthcare provider Multiplan and KKR’s purchase of Japanese auto parts maker Calsonic Kansei for US$4.3 billion—a rare foray by a US PE house into Japan.

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