Kevin Dowd October 07, 2016
Is there any growth in the pace of US growth investments? No. But compared to private equity investments of all types, minority investments are proving more resilient to 2016’s overall decline in deal flow than PE investments as a whole.
Investors have completed 599 PE growth investments in the US so far in 2016, according to the PitchBook Platform. That's on pace for about 780 deals, or a roughly 13% decline from last year, when 900 such deals were completed. It’s the second year in a row that deal count has dropped, and the pace is accelerating: 2015 represented a mere 4% downturn from 2014, which reached a recent peak of 935 growth deals.
When you compare the growth numbers against PE investments of all sorts, though—including buyouts, SBOs, recapitalizations, PIPE deals and more—2016 has actually been a better year for growth investments than 2015. This year is on pace for an 18% decrease in overall PE activity in the US, a significant difference from the 13% rate for growth deals. From 2014 to 2015, meanwhile, overall PE investment actually grew by 4%, according to the platform, a stark difference from the 4% decrease in the growth sector.
Faced with lofty deal multiples and an environment less conducive to buyouts than in years past, it appears PE investors are more frequently turning to minority investments as a way to mobilize capital.
On a sector-by-sector basis, growth deals are much less concentrated in the B2B and B2C sectors than are PE deals as a whole. Those two slices account for roughly 44% of all growth activity so far in 2016, compared to about 54% of deals of all types.
Looking at US growth activity by region, the West Coast has seen its share of deals bump up to 21% this year after hovering around 15% from 2013 to 2015.
Who are the most prolific minority investors in US private equity? Here’s a rundown of the most active firms in stateside growth rounds since the start of 2012:
PitchBook users can check out the full list of investors right here.