Private Equity Firms Set ‘Frenetic’ Pace for 2021

The asset class is on track for a record-breaking year of deals, exits, and fundraising, according to PitchBook data.

Victor J. Blue/Bloomberg

Victor J. Blue/Bloomberg

Based on performance in the first half of the year, 2021 is shaping up to be a record-breaking year for private equity.

In deals, exit activity, and fundraising, the industry its set to outpace previous highs, according to new data from PitchBook. In the second quarter of 2021, private equity deal making “continued at a frenetic pace,” the report said, with funds closing 3,708 deals worth an estimated total of $456.6 billion. For context, the entire year of 2020 saw 5,734 deals with a combined value of $711.6 billion.

“We are running out of metaphors to describe record-breaking deal, exit, and fundraising activity,” said Rebecca Springer, PE analyst at PitchBook and co-author of the study.

The report attributed the staggering levels of deal activity to various factors, including a partially vaccinated population, high investor confidence in the equity markets, a “frenzied” demand for high-yield debt, and the regulatory nature of the Biden administration. June’s club buyout of Medline Industries, a medical supply company, was cited as an example of the “risk-on” environment for dealmaking.

“Clocking in at an astonishing $34.0 billion EV, with the Blackstone Group, the Carlyle Group, Hellman & Friedman, and GIC participating, the deal inspired myriad comparisons to the mega-deals of 2006 and 2007,” PitchBook said in the report. “It is a noteworthy sign of macroeconomic optimism that Blackstone and the other dealmakers foresee an exit route for a company of this size, presumably in the public markets, in the next three to five years.”


Big Exits and Healthy Fundraising

Private equity exit activity has also been strong so far this year. According to the report, the exit count reached 676 in the first half of the year, totaling $355.9 billion in estimated exit value and exceeding 2019’s full-year total of $323.3 billion.

“We’re seeing a lot of really big exits and that is a result of the public markets really opening up as a good exit opportunity for private equity,” Spinger said. “That wasn’t the case in the run up to the pandemic.”

Before 2020, private equity firms “shied away from listing portfolio companies in the public markets due to widespread fears that the market cycle was nearing a recession,” according to the report. After last year’s Covid-19 crash, however, private equity managers took note of the strong public market recovery and became “more aggressive” in listing portfolio companies, PitchBook said.

As for fundraising, PitchBook said activity has been “healthy” in the first half of the year, with 207 funds closing with $179.6 billion. But Springer said fundraising may experience some backloading in the second half of the year.

“We do know of a number of really large funds that are still out in the market,” she said. “Fundraising data can be a little bit lumpy because of just where mega-funds hit in the cycle. Whether these all close by the end of the year or some of them close next year, it’s still likely to be a pretty strong.”