Plodding private equity dealmaking; construction, engineering investment slows

S&P Global Market Intelligence offers our top picks of global private equity news stories and more published throughout the week.

Private equity- and venture capital-backed dealmaking appears set for its second consecutive annual decline after peaking in 2021.

The running total for private equity deals globally since the start of the year stood at $302.69 billion as of Aug. 31, the lowest aggregate total for the measured period since at least 2019, according to S&P Global Market Intelligence data. Private equity could double that total in the remaining four months of 2023 and still not equal the $740.15 billion of deals recorded in 2022.

When private equity's Big Four reported earnings in early August, KKR & Co. Inc. co-CEO Scott Nuttall and The Carlyle Group Inc. CEO Harvey Schwartz both expressed some optimism about the M&A markets in their forward-looking comments, with Nuttall describing an uptick in activity in the firm's deal pipeline and Schwartz sharing the view that CEO confidence was rebuilding. But the month ended on a 44% year-over-year decline in the reported value of private equity-backed deals.

Perhaps there is a surprise in store for private equity in the fourth quarter. Or maybe those watching for signs of a rally in private equity dealmaking should set their sights on 2024.

Read more about August's steep year-over-year decline in private equity deals.

CHART OF THE WEEK: PE investment in construction, engineering slows from 2022 pace

⮞ Private equity- and venture capital-backed investment in construction and engineering businesses has fallen significantly behind the pace set last year, with the $1.77 billion in aggregate deal value recorded between Jan. 1 and Sept. 17 representing less than 25% of the $7.41 billion full-year total for 2022.

⮞ An $828.2 million round of funding for CCCC Urban Investment Holding Co. Ltd., a Chinese state-owned construction firm, was the largest private equity-backed deal of the year in the sector through Sept. 17.

⮞ Asia-Pacific construction and engineering businesses drew the most PE investment between Jan. 1 and Sept. 17, with 16 deals totaling a reported $855.8 million.

TOP DEALS AND FUNDRAISING

– KKR & Co. Inc. agreed to buy a 20% stake in Singapore Telecommunications Ltd.'s regional data center business for $800 million. As part of the deal, the company will have the option to boost its stake in the business to 25% by 2027 at the pre-agreed valuation.

– Partners Group Holding AG reached a deal to sell its remaining 10% stake in Borssele III / IV, a Dutch offshore wind farm, to European renewables investor Octopus Energy Generation. The closing of the transaction is subject to regulatory approvals.

– Galvanize Climate Solutions LLC raised more than $1 billion for its innovation and expansion fund at final close. The fund targets investments in early- to growth-stage climate companies that advance timely decarbonization.

– Goldman Sachs Asset Management LP held final closes for Vintage IX and Vintage Infrastructure Partners, two of its private market secondary funds. Vintage IX closed above its target at $14.2 billion, while Vintage Infrastructure Partners closed with about $1 billion in equity commitments.

MIDDLE-MARKET HIGHLIGHTS

– Quad-C Management Inc. completed an investment in Vortex Cos. LLC, a trenchless infrastructure rehabilitation products and services company.

– OMERS Private Equity signed a deal to acquire a majority interest in Knight Commercial, which provides restoration and roofing services. The company's co-founders will retain significant ownership, with the deal set to wrap up later in September.

– Axcel VII, which is managed by Axcel Management A/S, struck a deal to purchase Danish industrial automation company Tic Elkas A/S from Dansk Ejerkapital A/S and its management team. Axcel is also purchasing Eegholm Group from private investors. Both deals, with management reinvestment, are slated for completion in the fourth quarter.

– A unit of Investindustrial's Investindustrial Growth III SCSP fund agreed to purchase a 51% stake in Virospack SL, which manufactures droppers for the beauty industry.

FOCUS ON: ENVIRONMENTAL AND FACILITIES SERVICES

– KKR and other shareholders will sell their stakes in The GreenCollar Group, an Australia-based environmental markets platform, to Ontario Teachers' Pension Plan Board. The deal is likely to close in the fourth quarter.

– Pacific Equity Partners agreed to acquire a 50% stake in Australian landfill biogas-to-energy facility operator LMS Energy Pty. Ltd. from Sims Ltd.

For further private equity deals, read our latest In Play report, which looks at potential private equity-backed M&A, including rumored transactions, each week.