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U.S. Private Equity Continues To Invest Despite Pandemic

Private equity lobby group the American Investment Council published yesterday its mid-year investment report, which details the U.S. private equity industry’s deal activity during the first six months of the year. The report shows that $252bn was committed to 1,847 companies in H1, which, unsurprisingly, is lower when compared to the halfway mark in 2019, when the AIC recorded $404bn across 2,725 deals.

Drew Maloney, AIC President and CEO, says that the data shows that private equity continues to support the US economy despite the challenges brought on by the lockdowns across the country.

“In the midst of great uncertainty and instability in the capital markets, private equity continues to make long-term commitments to businesses and workers in all fifty states. Private equity firms remain a reliable source of investment and a long-term partner for growth to companies of all shapes and sizes,” he said.

The AIC’s report says that almost half of the deals - 718 to be exact - completed in the first six months of the year were in small businesses, which it defines as those with less than 500 people.

“Much of the attention in the private equity industry is on the larger companies, but small businesses are the backbone of the American economy. So many need capital and investment dollars. We [the US private equity industry] invest in every sector and in companies of various shapes and sizes,” said Maloney. “It’s incumbent upon us to highlight the contribution that private equity makes across America.”

At the sector level, Information Technology received the largest share of investment dollars with $69bn and Business Products and Services came a very close second with $68bn. Consumer Products And Services received $34bn, Healthcare and Energy $26bn each, Financial Services $25bn and Materials and Resources $4bn. Looking ahead to the remainder of the year, Maloney can’t say for certain which sectors will receive more investment but he expects activity to pick up generally.

“The investment environment is always cyclical; in 2008-09 it was lower and then it picked up. Despite the level of uncertainty this year, we still saw continued investment. The investment activity depends on where there is an opportunity to invest. Private equity funds are always looking for opportunities and we expect activity to increase in the second half of this year and into next year.”


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