Kevin Dowd September 20, 2016
Last year brought a major leap in secondary buyout activity, both worldwide and in the US. Through the first eight-plus months of 2016, though, those inflated figures have come crashing back to Earth.
From 2014 to 2015, the quantity of SBOs conducted rose 32% worldwide and 30% in the US, compared to rates of 8% and 3% for buyout activity of all sorts in those respective geographies, according to the PitchBook Platform. It was a stark contrast that carried across nearly all sectors.
This year, however, SBO activity has declined 21% in the US on a pro-rated basis—all the way back to 2014 levels and a figure that just outpaces the 20% drop in all buyout activity in the US in 2016. The dip hasn’t been quite as pronounced worldwide—at just 12% for SBOs compared to a 21% decline in total buyouts—but still represents a clear departure from last year’s elevated figures.
In the larger picture, SBO levels are still higher than they’ve been for much of the past decade, a period marked by a near-constant increase in activity as the market bounced back from the doldrums of the financial crisis. In the US, for instance, we’re on pace for about 450 SBOs this year, which would still be the second-highest total since 2007 despite the drop-off from 2015. The change appears to be more of a stabilization than an outright reversal.
Who have been the private equity firms driving what’s been a transformative past decade for the SBO marketplace? We used the PitchBook Platform to compile separate lists tallying up the busiest investors since the start of 2007 on deals conducted just in the US and for all deals around the world to see how the two samples compare.
As you can see, The Carlyle Group, Audax Group and KKR retain the top three spots for both geographies, with Carlyle and Audax flip-flopping the top spot. More intriguing notes pop up further down the list. ABRY Partners, for instance, conducts nearly all of its deals in the US and is thus absent from the global top 10. Conversely, Ardian does the bulk of its business in Europe, and therefore ranks fourth among the busiest SBO investors worldwide despite a mere nine stateside deals—outside the top 100.
The rest of the global top 10 is full of firms with similar geographical mandates. In all, six of the 11 firms on our list (including ties) are located in Europe, and just one firm ranked in the second half of the list—TPG—is located in the US. Among the busiest investors in the US, Ontario Teachers' Pension Plan is the only one headquartered in a different country.