PE investments up, exits down in Q3 – study

The Private Equity Growth Capital Council found in its trend report that exits slowed in the third quarter from a record in Q2, while new private equity investments rose 15% to $154bn.

Following a record exit volume level seen in the second quarter, activity has shifted focus from exits to new investments, according to the private equity trend report from the Private Equity Growth Capital Council (PEGCC).

The PEGCC report found that private equity investment in the third quarter rose 15 percent to $154 billion from $134 billion in the second quarter. This is the second-highest level of investment activity in the third quarter since 2007.

“This increase in investment is significant and suggests that private equity will continue to drive economic growth in companies and markets across the US,” PEGCC vice president of research Bronwyn Bailey said in a statement.

Equity financing for US leveraged buyouts also rose, up 2 percent at 43 percent in Q3, amid concerns reported by Private Equity International that debt used in LBOs is rising too high.

In the US, Apollo Global Management, which has $19 billion in dry powder ready to invest in private equity, is among firms moving into the “asset accumulation cycle”, while in Europe, Inflexion Private Equity is moving into acquisition mode, its managing partner Simon Turner told PEI in September.

At the same time, exit volume declined 32 percent from a record $102 billion in Q2 to $69 billion, which is still the highest level in this period in the past decade, PEGCC said. Fundraising levels in the US also dropped 12 percent to $59 billion from $67 billion in Q2.

At the end of September, dry powder of global buyout funds reached $486 billion, up from $448 billion in December 2014.

PEGCC’s report used data from PitchBook, Preqin and Standard & Poor’s leveraged commentary & data.