Private equity dealmaking slump continues as coronavirus pushes figures to new 12-month low

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Private equity dealmaking volume has continued its slump as the coronavirus pandemic weighs heavily on activity, with figures falling to a new 12-month low, data from Moody’s subsidiary BvD shows.

Just 487 private equity deals were announced in May – a huge drop from the 12-month high of 825 recorded last summer.

PE deal volume has been on a steady slide since December’s result of 720, with the Covid-19 crisis putting the brakes on everything from due-diligence to debt financing.

Despite the weak volume figures, dollars invested in private equity were actually up in May compared to the previous month, at $28.3bn compared to $21.2bn in April, BvD said.

The result represents a 34 per cent increase month-on-month, although value fell 63 per cent year-on-year from the $76.5bn recorded in May 2019.

BvD said the rise in value can be largely attributed to eight PE deals worth in excess of $1bn being announced during the month under review.

The biggest of those saw the Canada Pension Plan Investment Board and Montagu Private Equity agree to buy a majority stake in Luxembourg-based higher education institution operator Galileo Global Education Finance from Providence Equity Partners for $2.7bn.

Elsewhere, Apollo Global Management led the purchase of $1.75bn-worth of convertible preferred stocks in US-based food retailer Albertsons Companies, which is backed by Cerberus Capital Management.

Indian companies featured in five of the top 20 deals announced in May, BvD said, four of which targeted Reliance Industries’ digital services arm Jio Platforms.

Silver Lake, KKR, General Atlantic and L Catterton have all injected capital into the Indian digital services business in recent weeks, valuing it at about $65bn.

The US featured in four of May’s top 20 deals, as did companies based in New Zealand, South Korea and Japan.

China was the most frequently-targeted country in terms of PE volume in May 2020, BvD said, being targeted in 108 deals, despite a 17% decline month-on-month from 130 deals.

The US placed second with 107 deals, followed by Japan (40), India (39) and the UK (38).

The US was the most targeted country by value in May, with $6.3bn-worth of deals, a significant improvement month-on-month from the $3.7bn recorded in April.

India placed second by value, with $6bn, which included the third and fourth-largest PE investments announced in May, BvD added.

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