latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/leveraged-loan-news/pe-dry-powder-hits-record-high-purchase-price-multiples-also-grow content
BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
PRIVACY & COOKIE NOTICE
Log in to other products

Login to Market Intelligence Platform

 /


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *

* Required

In this list

As PE Dry Powder Hits Record High, Purchase Price Multiples Also Grow

Leveraged Loan Fund Assets Shrink Anew As Retail Investors Eye High Yield

Video: CLOs feel pinch from lumpy loan supply

Retail investors withdraw $2.57B from US high yield bond funds

Despite investor appetite, April European leveraged loan issuance slumps to €2.5B


As PE Dry Powder Hits Record High, Purchase Price Multiples Also Grow

As sponsors sit on piles of cash they want to put to use—private equity dry power as of May increased to a record $906 billion—PE shops have had to pay up on secondary deals (and on any LBO this year).

The average purchase price multiple on sponsor-to-sponsor transactions in 2017 is 10.6x, up from 10.4x in 2016 and the most since LCD started tracking this data (it was 9.4x in 2007). The average PPM on all 2017 LBOs was 10.3x (also the most on record).

Purchae Price Multiple Chart

For the record, of that aforementioned $906 million dry powder figure, roughly $560 billion of that is targeted for buyout funds proper, according to Preqin (venture capital and growth funds make up most of the remainder).

Meanwhile, excess sponsor cash has helped nudge leverage higher. Debt/EBITDA on secondary buyouts in 2017 has averaged 5.97x, well up from the 5.69x on these deals last year, and the most since the 6.02x in 2014.

Debt to Ebitda Ratio Chart

The equity contribution on secondary buyouts has inched higher from 2016, as well, with sponsors chipping in better than 40% on 2017 deals, compared to 38.9% last year.

With sponsor-to-sponsor transactions abound this year, the size of the loans backing those deals is relatively modest. The largest is a $1.885 billion credit backing the buyout of insurance concern USI by KKR and Caisse de dépôt et placement du Québec, from Onex. That B/B2 loan was priced at L+300, with a 0% LIBOR floor, and was offered at 99.5, for a four-year yield of 4.42%, according to LCD.—Staff reports

Try LCD for Free! News, analysis, data

Follow LCD News on Twitter.

This story first appeared on www.lcdcomps.com, an offering of S&P Global Market Intelligence. LCD’s subscription site offers complete news, analysis and data covering the global leveraged loan and high yield bond markets. You can learn more about LCD here.