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July 14, 2016

Buyouts are Back!

A Mint article titled Buyout activity set to cross 2015 highs; slow start to PE exits quotes Venture Intelligence data on high Buyout activity in 2016.
Buyouts showed strong momentum in the first six months of 2016, with the total number of deals and deal value at 14 and $2.44 billion, respectively, data from private equity (PE) and venture capital database Venture Intelligence show. Buyout deal value more than doubled from $1.14 billion in the same period last year. The key sectors that contributed to the increase are information technology (IT) services, financial services and healthcare.
The top buyout deals of the first half of 2016 included Blackstone Group LP’s $1.1 billion acquisition of a majority stake in listed IT firm Mphasis Ltd, Kedaara Capital and Swiss private equity (PE) firm Partners Group’s purchase of mortgage lender AU Financiers for around $140 million and Abraaj Group’s $221 million deal to buy Care Hospitals

Reasons for Increasing Buyout activity (according to the article):

  1. Larger availability of professional management teams to run businesses
  2. Promoters are becoming "rational" about decisions regarding ceding control of businesses.
  3. Banks and lenders pushing distressed firms to sell some of the assets or entire businesses
The data point was also highlighted in our Private Equity Report for 2015.  Buyout activity was on the upswing grabbing as much as 18% of the pie (in value terms) compared to just 6% in 2014.
In our Q2 2016, Buyouts have been the sole category which saw rise in investments.

Venture Intelligence is India's longest serving provider of data and analysis on Private Company Financials, Transactions (private equity, venture capital and M&A) & their Valuations in India.