Buyout activity returns to 2008 levels

Private equity-backed buyouts in 2010 totalled $221bn, the highest amount since 2008's $240bn, but fundraising for the year showed no increase over 2009.

Private equity activity in 2010 reached levels not seen since just prior to the global economic crisis, according to the Private Equity Growth Capital Council’s year-end Private Equity Index.

Private equity-based buyouts for all of 2010 totalled $221 billion, just short of 2008’s $240 billion of deals and an 81 percent increase compared to the $122 billion-worth of buyouts in 2009.

Exits were also on the rise: the 96 private equity-backed initial public offerings that took place over the course of the year raised more than $35 billion globally, up from 32 IPOs that raised $12.7 billion in 2009, the PEGCC said. Exits in the US during 2010 totaled in excess of $110 billion, more than double the value of exits in 2009.

“Investment, deal volume and exits all increased sharply in 2010, and the Index finished the year well above its 10-year moving average as a result,” PEGCC vice president of research Jason Thomas said in a statement. “But while investment activity in 2010 reached levels that hadn’t been seen since early 2008, fundraising remains the soft spot, showing no increase over 2009 and remaining near 2004 levels.”

Total fundraising in 2010 reached roughly $104.4 billion, compared to $100.3 billion in 2009 and $99.8 billion in 2004. As of January 2010, buyout dry powder stood at an estimated $446 billion globally.

The PEGCC’s index measures global private equity activity based on total direct investment, buyout transaction volume, fundraising and the dollar value of private equity exits. The index reaches 100 when all four components are at their 10-year moving average. As of the end of 2010, the index stood at 115.3, its highest level since the fourth quarter of 2007.