PRZOOM - /newswire/ -
Nishi-Shinjuku, Tokyo, Japan, 2010/11/17 - In the third quarter, total equity investment in PE transactions increased to a record $40.1 billion, up from $36.4 billion in the second quarter and $17.8 billion in the first quarter.
Wiltshire Capital and the global private equity industry in the third quarter continued its rebound from the 2008-2009 recession.
For the third quarter of 2010, the private equity index stood at 104.33, up from 100.76 in the second quarter and 86.41 in the first quarter of the year. At its low point in the first quarter of 2009, the private equity index measured 60.39. The private equity index peaked at 150.83 in the second quarter of 2006.
The index’s surge since the second quarter was driven by a rising level of equity investment in global PE transactions — including equity contributions to buyouts, minority stakes, private placements, foreign investments, growth capital and other non-venture investments — as well as an increased dollar volume of private equity-backed acquisitions. These positive trends were offset in part by a decline in fundraising from the previous quarter and a drop in dollar volume of PE-backed initial public stock offerings.
In the third quarter, total equity investment in PE transactions increased to a record $40.1 billion, up from $36.4 billion in the second quarter and $17.8 billion in the first quarter. Year-to-date global equity investment totaled $94 billion, also an all-time high.
The previous record was $80 billion of equity invested in the first three quarters of 2007. Dollar volume of private equity-backed acquisitions grew to $70.5 billion, from the $45.4 billion in transactions recorded in the second quarter and $32.6 billion in the first quarter.
While the total amount of equity investment and total dollar value of PE transactions have been rising steadily through the year, the share of the overall M&A activity attributable to private equity was 11 percent, well below the 2007 peak of 23.4 percent. Through three quarters, the total dollar volume of global PE-backed acquisitions is running at about one-fifth the pace of 2007.
The spike in global equity investment is attributable to three principal factors. First, private equity firms in many cases increased the proportion of equity contributed to individual acquisitions, reflecting continuing tightness in credit markets. Second, firms made more minority investments, which tend to be all equity, as opposed to outright acquisitions. Third, firms increased their investments in faster growing companies.
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