Private Equity Industry Investment Report 2015-Q4
www.pegcc.org 2
Table of Contents
Page Executive Summary 3 Business Products & Services 5 Consumer Products & Services 7 Information Technology 9 Financial Services 11 Healthcare 13 Materials & Resources 15 Energy 17 3
Executive Summary
In 2015, Business Products & Services (B2B) and Consumer Products & Services (B2C) received over half of U.S. private equity investment with B2C outpacing B2B by over $20 billion. Financial Services and Information Technology finished the year in third and fourth places, respectively. In Q4, investment in four industries fell (Business Products & Services, Consumer Products & Services, Information Technology, and Healthcare), while investment in Financial Services increased.
Business Products & Services (B2B) fell for the second consecutive quarter to $31 billion in investment and ended the year with less investment in 2015 than in 2014. The deal count also fell from 338 in Q3 to 290 in Q4. Consumer Products & Services (B2C) suffered the most significant decrease, falling by $61 billion from last quarter’s extraordinary peak. Despite this quarterly drop in investment, B2C still closed the year with over $40 billion more investment than in 2014. Consumer spending is shifting, with younger generations valuing an online shopping experience that requires B2C investment in technology.
The Financial Services industry was a bright spot in Q4 with an increase of $17 billion. However, the number of deals dropped from 79 in Q3 to 72 in Q4 indicating that private equity investment in the financial services space is focusing on larger investments in fewer companies.
Information Technology (IT) and Healthcare both saw decreases in investment in Q4. IT experienced a slight decrease from $23 billion in Q3 to $21 billion in Q4. The number of IT deals held at 133. The Healthcare sector fell by $7 billion to $15 billion. No Healthcare deals surpassed the $1 billion mark.
Finally, private equity investment in Materials & Resources and Energy leveled in Q4. Materials & Resources investment held at $5 billion and investments remain small in comparison to other industries. Investment volume in Energy, still suffering from volatility in the energy markets, was stuck at $8 billion while the number of private equity investments shrank to 41 in Q4. After an extremely strong first three quarters, private equity fundraising in energy in Q4 sank to $240 million, yet 2015 closed with record energy fundraising levels. 4
2015 Industry Investment Totals 5 Business Products & Services (B2B) Deals
Top Deals 2015-Q4 Company Date Investment Value (Bil) Financial Sponsor
Ironshore 11/23/15 $2.1 Fosun International
AlliedBarton Security Services 12/2/15 $1.7 Wendel Investissement
Apollo Global Management, Platform Vectra (formerly OM Group) 10/28/15 $1.6 Specialty Products
Source: PitchBook 6
Business Products & Services TVPI
Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. 2013 and 2015 medians are derived from samples with less than 20 deals. TVPI is as of June 20, 2015. 7 Consumer Products & Services (B2C) Deals
Top Deals 2015-Q4 Company Date Investment Value (Bil) Financial Sponsor
Strategic Hotels & Resorts 12/11/15 $6.0 The Blackstone Group
Belk 12/10/15 $3.0 Sycamore Partners Management
Truck-Lite Company 12/11/15 $1.0 BDT Capital Partners, Koch Industries
Source: PitchBook 8
Consumer Products & Services TVPI
Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. TVPI is as of June 20, 2015. 9 Information Technology Deals
Top Deals 2015-Q4 Company Date Investment Value (Bil) Financial Sponsor Delta-v Capital, Digital Bridge Holdings, ExteNet Systems 11/17/15 $1.4 Stonepeak Infrastructure Partners, The Goldman Sachs Group
Premiere Global Services 12/8/15 $1.0 Siris Capital
HelpSystems 10/8/15 $0.7 H.I.G. Capital, Split Rock Partners
Source: PitchBook 10
Information Technology TVPI
Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. TVPI is as of June 20, 2015. 11 Financial Services Deals
Top Deals 2015-Q4 Company Date Investment Value (Bil) Financial Sponsor
Salim Group 12/11/15 $1.0 Northstar Group, TPG Capital
DLB Capital, Envest Private Equity, Hall RDM Financial Group 12/17/15 $0.7 Capital Partners, HighTower Advisors
Genworth Financial (lifestyle 12/2/15 $0.5 AXA Group protection unit)
Source: PitchBook 12
Financial Services TVPI
Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. 2009, 2011, 2012, 2013, 2014, and 2015 medians are based on samples with less than 20 deals. TVPI is as of June 20, 2015. 13 Healthcare Deals
Top Deals 2015-Q4 Company Date Investment Value (Bil) Financial Sponsor
Affordable Care 10/22/15 $0.8 Berkshire Partners
DuPage Medical Group 12/29/15 $0.3 Summit Partners
Equian 12/18/15 $0.2 New Mountain Capital
Source: PitchBook 14
Healthcare TVPI
Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. 2009, 2013, and 2014 medians are based on samples with less than 20 deals. TVPI is as of June 20, 2015. 15 Materials & Resources Deals
Top Deals 2015-Q4 Company Date Investment Value (Bil) Financial Sponsor 3i Group, Apax Partners, Azelis, IGI, PM & KODA Distribution Group 12/21/15 $0.6 Partners
Universal Fiber Systems 10/5/15 $0.3 H.I.G. Capital
Schur (US Ice Business) 10/13/15 $0.04 Centerbridge Partners, Reddy Ice
Source: PitchBook 16
Materials & Resources TVPI
Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. 2008, 2010, 2011, 2012, 2013, and 2014 medians are based on samples with less than 20 deals. 2015 data is insufficient to calculate a median TVPI. TVPI is as of June 20, 2015. 17 Energy Deals
Top Deals 2015-Q4 Company Date Investment Value (Bil) Financial Sponsor
Gulf Oil 12/29/15 $1.2 ArcLight Capital Partners
WPX Energy (San Juan Basin 12/31/15 $0.3 I Squared Capital Gathering System)
Franklin Square Capital Partners, Triangle Sunnova 10/22/15 $0.3 Peak Partners
Source: PitchBook 18
Energy TVPI
Note: TVPI is calculated from portfolio company cash flows. TVPI is the total value of assets as a multiple of the amount paid in to the investment. TVPI includes distributed capital and the net asset value of unrealized investments. Median TVPI is based on companies with the same investment year. The 2002 median is based on a sample with less than 20 deals. 2015 data is insufficient to calculate a median TVPI. TVPI is as of June 20, 2015. 19 Energy Fundraising
Source: PitchBook