Private equity rounds off year of recovery

The industry nearly doubled the value of last year’s deals in the first 10 months of 2010 alone, with the upwards trend set to continue to the end of the year.

As 2010 comes to a close, the private equity industry has posted an impressive comeback from 2009’s figures, with 1,778 deals announced valued at $196 billion in the first 10 months of the year, according to data provider Dealogic.

The numbers show a jump from the 1,664 deals announced in all of 2009, which totalled $103 billion. They are still, however, a way off the record figures of 2007, in which 3,195 deals were announced with a total value of $716 billion.

A further sign of the returning deal market is the increasing frequency of seven-figure deals. Private equity firms announced 45 deals worth at least $1 billion in the first 11 months of the 2010, a figure nearly double the 23 recorded in 2009, said Dealogic.

Notable deals valued at more than $1 billion this year include the Kohlberg Kravis Roberts-led leveraged buyout of Del Monte, maker of Contadina pasta sauce and pet food Meow Mix for $5.3 billion, and the $4.7 billion completed acquisition of Tomkins in the UK by the Canada Pension Plan Investment Board and Onex Corp.

Final figures for November will boost the year’s performance further still, according to data compiled by Ernst & Young, which shows private equity houses announced 149 acquisitions valued at $27.8 billion.

“In the past year, private equity houses have returned to a focus on investing given the substantial level of committed funds still available; moving from fixing portfolio issues to targeting acquisitions and realising disposals.  Combined with an easing in the availability of debt, and at cheaper rates, private equity activity levels recovered dramatically in 2010 compared with 2009,” said Rustom Kharegat, head of private equity at KPMG in an email exchange regarding the firm’s strengthened European revenues in the asset class for 2010.