It’s time for private equity firms to collect. The second quarter of 2011 has been a good one for these institutions, with records for exits already falling.
Let’s take a quick look at the hot numbers from this scorching quarter:
1. The big number: there have been 201 private equity-backed exits announced so far this quarter. This amounts to $85 bn in total value. According to alternative investment research firm Preqin, we’re looking at ‘record levels’.
2. Compared to last year’s Q2: Well, there’s no comparison. Year-over-year growth has already passed 50 percent, and we still have June in front of us.
3. Previous success doesn’t measure up: the last record, set in the fourth quarter of 2010, as $81.3 bn for private equity-backed exits. It isn’t the best quarter any longer. And again, we still have a month to go in this quarter.
4. Europe picks up the pace: North American exits are at $23.7 bn so far this quarter, which is consistent with the two prior quarters. In Europe, however, it’s a much different story. There have been 82 private equity-backed exits announced, totaling $57.9 bn. This is twice the previous record, which was set half a decade ago (Q4 2006). In Asia, $3.4 bn in private equity-backed exits have been announced this quarter.
5. The grand exit: Nordic Capital, DLJ Merchant Banking Partners (Credit Suisse) and Avista were among the investors selling Takeda Pharmaceutical company … for €9.6 bn. This is the largest private equity-backed exit so far this quarter.
Why They Matter: Ask any MBA student what she wants to be when she grows up, and chances are she'll gush about landing a job at a private-equity firm like Blackstone, Carlyle, Kohlberg Kravis Roberts, or Texas Pacific Group.
And why not? Private-equity shops raised a record $217 billion in new capital in the United States alone during 2006 and are now busy buying up everything from massive REITs like Zell's Equity Office Partners (purchased by Blackstone for $38.3 billion) to tiny startups like visual effects firm the Mill.
With so much private money flowing into every sector of the economy, some foresee a train wreck. Perhaps. But in the meantime, PE firms announced more than a quarter-trillion dollars' worth of deals in the first five months of this year -- which means that, for better or worse, private equity will make its presence felt for a long time to come.