Leveraged buyouts rebound

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Private equity firms announced $ 146 billion in new deals in the third quarter, eclipsing the $ 103.8 billion in deals a year ago in the pre-pandemic world.

The time of dreams

Private equity is no longer safe on the spot.

Barron previously noted that Wall Street far back on the sidelines in the first half of the year, unwilling to bet on companies in a context of market volatility and with much of the economy closed. But the third quarter saw activity accelerate: activists are preparing the ground for their 2021 campaigns, and pipelines for mergers and acquisitions are being replenished. And now there is evidence that debt buyout activity is rebounding as well.

In the third quarter, private equity firms announced new deals of $ 146 billion, marking an increase of almost $ 100 billion in deals from the previous quarter and even eclipsing the $ 103.8 billion in deals. of the third quarter of 2019, according to Dealogic, as reported by The Wall Street Journal. Part of this resurgence has to do with deals – many of which were tabled at the start of the lockdown – that are coming to life.

There are also other reasons for the increase in activity. According to data from Preqin, asset managers, including private equity firms, have more than $ 2.6 trillion in dry powder ready for deployment, and the appetite for leveraged loans is over. risky seems robust.


SPDR High Yield Bond

the exchange-traded fund (ticker: JNK) gained 4.5% in the third quarter, while the

IShares Quality Business Obligation

ETF (LQD) gained 0.8%. So far this month, the High Yield Bond ETF is up 1.1% while the Investment Grade ETF is down 0.3%.

Overall, the fourth quarter could be important for buyouts.

Write to Carleton English at [email protected]

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