Pension fund-backed M&A deal value slides year over year in Q3

Mergers and acquisitions with direct pension fund involvement sank in the third quarter to $6.08 billion, down 16.5% from $7.28 billion in the same period in 2022, according to S&P Global Market Intelligence data.

The number of disclosed deals slipped during the period to 23, from 36 transactions a year ago.

However, on a quarter-over-quarter basis, the cumulative value of deals with pension fund involvement grew 33.6% from $4.55 billion. The number of deals was down from 26 transactions.

In the first three quarters of 2023, the value of pension fund-backed M&A deals totaled $24.44 billion, down from $31.93 billion year over year. The number of deals declined to 78, from 116 transactions recorded the previous year.

Top deals

Six of the top 10 deals in 2023 included the involvement of private equity or venture capital, and two of them were valued at $1 billion or more.

In the largest transaction in the third quarter, H2GS AB, or H2 Green Steel, raised about €1.5 billion from an investor group including Swedish pension fund Andra AP-fonden and private equity firms Temasek Holdings (Pvt.) Ltd., Kinnevik AB, Altor Equity Partners AB and Just Climate LLP.

Proceeds from the fundraising activity will be used to develop a green steel plant in Sweden.

– Download a spreadsheet with data featured in this story. – Check out the second-quarter Data Dispatch on M&A deals with direct pension fund involvement. – Explore more private equity coverage.

The second-biggest transaction was battery recycling company Redwood Materials Inc.'s $1 billion series D round. Canadian pension fund OMERS Administration Corp. and private equity firms Capricorn Investment Group LLC, M12 and Deepwater Asset Management LLC participated in the round.

Sector exposure

The technology, media and telecom sector received the bulk of pension fund-backed investments in the first nine months of the year with $17.67 billion, more than double the $6.12 billion the industry secured a year ago.

It was followed by the energy and utility sector with $1.98 billion and the materials sector with $1.83 billion.