Daily Management Review

Bain notes record activity on the private equity market


03/04/2019


Consulting company Bain & Company has released an annual report on the private equity industry. Experts noted that the total amount of such capital, aimed at the purchase of companies, grew by 10% and amounted to $ 582 billion only in 2018, and over the past five years this volume has amounted to a record $ 2.5 trillion.



Public Domain Pictures
Public Domain Pictures
In the tenth annual report of the consulting company Bain & Company notes that the private investment capital industry continued to grow steadily. “Being under tough pressure to make new deals, the private equity market in 2018 again recorded an impressive growth in investment volumes. Intense competition and rising asset prices have affected the number of transactions, reducing them by 13% compared with 2017. But the total volume of investment transactions involving private capital grew by 10% to $ 582 billion, which culminated in a record five-year term in the history of the industry,” the report says.

With 2018, the total private investment has amounted to a record $ 2.5 trillion since 2014.

Bain experts explain this growth by favorable macroeconomic conditions and the situation in the financial market. “As the world economy has been growing in 2018 for the ninth consecutive year, the global private equity industry continued to actively make deals, sell the business it bought at a profit, and raise capital in the markets,” the report says. “Permanently tough competition for assets brought transaction multipliers to record heights, and growing concern for the near future of the world economy and the possible slowdown have affected the decision-making process. Many private investment companies have begun to pay prices for assets, which they would never have paid before. But now they are doing this in order to fix the value of the asset. ”

Despite the rise in the value of assets and multipliers, the funds have managed to come out of investments with a profit for themselves. The total number of exit transactions amounted to 1,146 in 2018, and the volume was $ 378 billion, which is at the 2017 level. In total, since 2014, the total volume of transactions on leaving investments amounted to $ 2 trillion, which also became a record five-year plan in the entire history of the industry.

Speaking of how much money the funds attracted from investors in the market, the researchers emphasize that the dynamics have slightly deteriorated compared to 2017, but still remained impressive ($ 714 billion). This is the third result in history. In total, since 2014, there have been a total of $ 3.7 trillion of funds attracted.

The last five years have become the best for the private investment capital industry,” concluded Hugh MacArthur, head of the Bain & Company department for private capital market analysis. - We saw the maximum amount of capital involved in the work, good exit deals and decent profits. The funds began to work particularly actively against the background of concerns about a possible slowdown in the economy, and given the high competition, the price of assets rose to record historical figures.”

source: bain.com






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