Global PE deal value at USD 1.4 trillion in 2018; highest since 2007: Report

The value of private equity (PE) deals reached USD 1.4 trillion globally in 2018, surpassing the previous peak of 2007, says a report.

Global PE deal volume fell five per cent to about 9,000 transactions, down from 9,500 deals in 2017, the report McKinsey Global Private Markets Review 2019 said Tuesday.

"Even with the slowdown, 2018 was the third-highest fund-raising year on record. And despite the flat trend in deal count, the value of PE deals reached a new high in 2018 at USD 1.4 trillion, finally surpassing the pre-crisis peak in 2007," it said.

At current exchange rate, the global PE deal value translates into Rs 99.43 lakh crore.

Activity was most robust in North America, where capital invested rose by 20 per cent, or USD 133 billion, from 2017 to 2018, it said.

European deal activity hit a record as well, with USD 495 billion invested in 2018, up five per cent from the previous year.

"In both regions, year-on-year growth owes some measure of its strength to mega deals. 19 deals worth more than USD 5 billion in 2018 were struck in North America and Europe, into companies operating in healthcare, financial services, real estate services, IT, and food and beverage industries," the report by McKinsey, a management-consulting firm, added.

In contrast, deal value in Asia dropped sharply by 42 per cent from 2017 to 2018, pulled down by China and India, which together saw a decline of approximately 60 per cent, the report said.

The record deal value of 2018 was propelled by growth in deal size. The average PE transaction in 2018 was USD 157 million, up 22 per cent since 2015.

On fund raising, the report said, in 2018 fund raising slowed slightly from 2017 record clip, falling to USD 778 billion, down by 11 per cent.

"The decline was broad-based, as every region and most asset classes fell," it said.

Despite the 2018 slowdown in fund raising, predictions are robust for 2019 with funds targeting USD 300 billion, roughly double the number sought this time last year, it added.

Private market firms are dedicating greater efforts to advancing the efficiency and differentiation of their own internal systems, aiming for greater efficiency at scale and beginning to look to digital tools for scalability and competitive advantage, the report said.