Buyout activity surges in Q2

Private equity-backed buyouts rose 28% during Q2 2011, while fundraising experienced a slight decline from the previous quarter.

Private equity buyout volume in the second quarter of 2011 rose to $67.5 billion, a 28 percent increase compared to the first quarter of the year, according to the Private Equity Growth Capital Council.

Globally, buyout funds raised $27.8 billion during Q2 2011, a 7 percent quarterly decrease. The sharp increase in deal activity and slight decline in funds raised contributed to the Private Equity Growth Capital Council’s Private Equity Index holding steady through the second quarter at 103.8, compared to 104.7 after Q1. Both quarters came in above the index’s 10-year average of 100, indicating that overall private equity activity has continued to remain robust through the first half of the year.

“The good news is that private equity capital continues to be deployed in an economy starved for investment capital, and there is still plenty of dry powder available,” PEGCC president and chief executive officer Douglas Lowenstein said in a statement. “With signs of renewed economic headwinds impacting the global debt and equity markets, the index may be under some pressure at least through Q3.”

While the council’s private equity index remained above its ten-year average after the first and second quarter of the year, both quarters represent a decline from the end of 2010, when the index stood at 115.3, its highest level since the fourth quarter of 2007.

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.