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PE exits have surged past 2020 levels; global M&A tops $1 trillion again in Q3

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

Note: The PE Pulse will not publish Friday, November 26. Your next issue will be Friday, December 3.

Global private equity activity has entered record territory this year across several measures, and now exits can be included on that list.

Private equity firms exited 3,204 investments for a total deal value of $569.4 billion in the year to Nov. 9, surpassing figures for full year 2020, when 2,594 portfolio companies were sold worth an estimated $521 billion.

The industry's record year for exits was 2015, when the total value globally reached about $700 billion, according to S&P Global Market Intelligence data.

Market participants expect strong exit activity to continue in 2022. Pete Witte, global private equity lead analyst for EY Knowledge, said the firm is "seeing a lot of interest from trade buyers, and certainly secondaries. [Special purpose acquisition companies] are another dynamic in the market that just wasn't there a year ago at this time."

Brian Richards, a Chicago-based partner in the private equity and M&A practices of law firm Paul Hastings, predicted it would take an economic shock to end the record run of exits, but he suggested the fading threat of tax rate increases that had spurred on exit activity could take some of the pressure off deal-makers to act quickly. "If the Republicans get some piece of Congress, then the tax risk will abate entirely," he said.

Read more about what's driving private equity's rush of exits here.

CHART OF THE WEEK: M&A continues $1 trillion+ streak

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The third quarter marked the fourth straight period in which the total announced value of global M&A activity topped $1 trillion. Before this streak, deal announcements had not crossed the $1 trillion threshold for three consecutive quarters, according to Market Intelligence data that dates back to the 1990s.

Total global announced transaction value in the third quarter increased 13.7% sequentially and 32.0% year over year to $1.170 trillion, according to Market Intelligence's latest M&A and Equity Offerings Market Report.

The U.S. market saw the lion's share of M&A, with the total value of transactions jumping more than 40% year over year to $551.56 billion.

FUNDRAISING AND DEALS

* KKR & Co. Inc. and Global Infrastructure Partners LP signed a deal to buy all of CyrusOne Inc.'s outstanding common shares for $90.50 apiece in an all-cash transaction valued at about $15 billion, including the assumption of debt. KKR also agreed to invest in Beacon Pointe LLC, parent company to independent registered investment advisory Beacon Pointe Advisors LLC.

* The Carlyle Group Inc. will purchase Swiss industrial software provider AutoForm Engineering GmbH from Astorg Partners in a deal that could be valued at €1.75 billion, The Wall Street Journal reported, citing people familiar with the matter. Moreover, the acceptance period for Schaltbau Holding AG's shareholders to agree to Carlyle's offer to buy all outstanding shares of the German mechanical and electrical engineering group it does not already own for €53.50 per share has commenced and will end Dec. 14.

* Funds managed by Blackstone Inc.'s Blackstone Tactical Opportunities agreed to make a significant, strategic investment in healthcare supply chain solutions provider Life Science Logistics LLC. Funds managed by the firm have also wrapped up their acquisition of market intelligence and data platform Data Group Inc. from Oriental Rainbow LLC, a subsidiary of China Oceanwide Holdings Group Co. Ltd., for an enterprise value of $1.3 billion.

* Funds managed by Apollo Global Management Inc. and Wecken & Cie. launched a review of strategic options, including a sale, in relation to their controlling stake in German commercial real estate company DEMIRE Deutsche Mittelstand Real Estate AG.

ELSEWHERE IN THE INDUSTRY

* Oaktree Capital Management LP raised its biggest fund to date with the final close of Oaktree Opportunities Fund XI LP and its related vehicles, with $15.9 billion in capital commitments.

* Waterland Private Equity Investments BV, through its Waterland Pvt. Equity Fund VII, divested pan-European scientific research and analysis group Cawood Scientific Ltd. to Ensign-Bickford Industries Inc.

* Middle-market private equity firm Aurora Capital Partners added Westcoast Gate, which offers automated gate and security solutions, to its portfolio after acquiring the business from Kian Capital Partners LLC.

* TA Associates Management LP will sell power transmission engineering software developer Power Line Systems Inc. to infrastructure engineering software company Bentley Systems Inc. for approximately $700 million in a cash-and-stock transaction.

FOCUS ON: IT CONSULTING AND OTHER SERVICES

* Innova Capital SA agreed not to redeem $23 million of Alpha Capital Acquisition Co.'s publicly traded shares in relation to the blank-check company's merger with Latin American data software platform Semantix Tecnologia Em Sistema de Informacao SA in a deal set to close in the first half of 2022. Semantix's existing shareholders such as Inovabra Ventures and FJ Labs Inc. will also provide a $94 million private investment in public equity in relation to the transaction.

* Eurazeo SE agreed to buy a majority stake in Scaled Agile Inc., which offers professional training content and certifications for business agility practices, for $300 million.

* BGF Investment Management Ltd. deployed £8.7 million into U.K.-based IT business Kick ICT Group Ltd.