With the new decade, Private Equity finds itself in something of a paradox. PE firms have record amounts of unspent cash on hand and they plan on heading back to the markets to raise more.
Private markets continue to attract investors looking for the historically higher returns that can be found outside the public markets. The upshot: PE fundraising this year will likely come in fairly steady, near 2019's record haul.
This extraordinary amount of ‘dry powder’ has caused competition for potential deals to increase and in many cases, that's driving up deal multiples—potentially bad news for firms who may be buying too high and limiting returns.
In total, nine Irish companies were bought by PE investors in 2019. The deals amount of 18% of all M&A notified to the CPCC during the year, compared to PE’s 10% share of global M&A.
Of that, deals involving an Irish target and a foreign buyer totalled $8.9bn. Despite the decline in deal value, the number of inbound deals involving a foreign buyer was almost 200 and the highest annual tally since Refinitiv began collecting data in the 1970s. Irish domestic deals totalled $4.8bn, a six-year high and mainly made up of mid-market transactions. M&A with any Irish involvement totalled $44.5bn during 2019, well down on the previous year, and the overall tallying of all inbound, outbound and domestic transactions was also down on the previous year.
According to the latest Mergermarket Global and Regional M&A report, KPMG closed the highest number of M&A deals in Ireland during 2019. The report, which includes country analysis and league tables for Ireland, shows that KPMG advised on 17 deals in during 2019, the highest number of deals closed by any advisor in Ireland. From an investment standpoint, tracking venture capital funding can be tricky. Latest numbers from the Irish Venture Capital Association (IVCA) showed that while there have been quarterly jumps up and down, funding overall in the first nine months of 2019 grew from €546 to €566 million.
The year saw reasonably healthy growth in the number of small deals, €10 million or less, but a decline in larger deals. It suggests that more companies are getting the early seed capital needed, but many may not be scaling to more mature stages as effectively. Drilling down on the figures, 2019 was a strong year for Fintech. Notably, Fenergo - arguably Ireland’s biggest indigenous fintech firm - raised a lofty €66 million during the summer, while in the same quarter Future Finance raised €23 million. Hot on the heels of Fintech follows Health, Medtech and Biotech companies as big winners.
For more information and to see what's next in the PE and Corporate Finance market, be sure to download our 2020 Salary Guide & Market Insights here