Biggest year ever for private equity on track in Q1
With the first quarter of the year now behind us, Allens' predictions for a history-making year in private equity are coming to fruition.
So far this year, Australia is experiencing the busiest market ever for PE dealmakers. Record-sized funds have also been raised, suggesting that the theme will continue.
The firm provided advice on a number of the major private equity transactions in Q1, advising Unispace on the sale of Unispace Global to PAG Asia Capital for $450 million and TA Associates on its $417 million acquisition of a majority stake in BetaShares Capital. The firm is also involved in various confidential PE transactions.
Allens' PE team predicted 2021 could be the busiest year ever for PE dealmakers in its annual PE Horizons publication, released last month.
'We're seeing a perfect trifecta of abundant debt and equity capital, relatively stable virus and economic conditions, and corporate bidders largely on the sidelines,' said Partner Noah Obradovic, one of the report's lead authors.
PE Horizons predicted buyside activity would be supercharged in 2021, with PE dealmakers facing reduced competition from corporate and strategic bidders, who are largely preoccupied with repositioning their businesses in the new consumer environment, and foreign government acquirers, who have been hampered by increased foreign investment protectionism.
'We expect to see more instances of co-investment between PE and limited partners, which means bigger M&A deals this year, as well as more creative deal structures, particularly buy-and-build and non-core carve out deals,' said Partner Kounny Rattley, joint lead author of the report.
'PE managers will likely continue to take advantage of the strong IPO window that emerged in the back half of 2020, particularly those businesses that have benefited from changing consumer spending habits,' she said.
Despite predictions that 2021 - and in particular the wind-down of government support post-COVID - could bring about bargain opportunities for PE, the report's authors say this is unlikely to materialise.
'Similar to 2020, we don't expect there will be many distressed opportunities, and when they do present themselves, those assets are unlikely to be acquired at bargain prices,' Noah said.