Montage of company names and US dollar bills
Buyout groups have announced 6,298 deals since the beginning of January © FT montage

Private equity firms have had their busiest six months since records began four decades ago, striking deals worth more than $500bn and helping to propel global mergers and acquisitions activity to an all-time high.

Buyout groups have announced 6,298 deals since the beginning of January, worth $513bn even before counting a $34bn megadeal for the medical supply company Medline, the strongest half-year result since at least 1980 according to figures from data provider Refinitiv.

Wider corporate dealmaking continued at a frenzied pace, with overall transaction volumes hitting an all-time high of $1.5tn this quarter, the fourth consecutive quarter in which it has topped $1tn in a remarkable rebound in activity since the early days of the pandemic.

“The level of deal activity is truly extraordinary, and beyond any of our expectations [last year],” said Cathal Deasy, global co-head of M&A at Credit Suisse.

Companies have struck $2.8tn of deals since the start of January, up a record 129 per cent from the same period last year, the figures show, with deals including WarnerMedia’s combination with Discovery to create a streaming company worth approximately $135bn.

Private equity deal volumes push global M&A to highs

“The transactions we’re seeing are high-quality,” said Alison Harding-Jones, Citigroup’s Europe, Middle East and Africa M&A head.

“Some of it is companies reorganising in response to Covid and some are taking advantage of a sellers’ market. There may be an element of people thinking, will the environment be this good in six months’ time?”

Investment banks have raked in some of their highest-ever fees during the dealmaking frenzy. Total M&A fees hit $17.9bn in the first half of this year, the highest since records began in 2000.

Private equity expanded its share of total dealmaking volumes to 18 per cent in the first half of the year as it raced to invest record-sized funds after a slowdown at the start of the pandemic.

Blackstone was involved in three of the 10 largest private equity-backed deals that Refinitiv counted, including the €9.3bn acquisition of Atlantia’s toll road business alongside Macquarie Group and the Italian state-controlled Cassa Depositi e Prestiti.

It also agreed to buy US medical supply company Medline in a $34bn deal alongside Carlyle and Hellman & Friedman, marking the return of large consortium deals, though the Refinitiv figures do not include this because the financial terms of the transaction were not publicly disclosed.

Global dealmaking rockets

“We have been quite active both deploying capital and exiting from investments this year,” said Jon Gray, Blackstone’s president and chief operating officer, adding that while asset prices are “certainly not inexpensive”, the firm was benefiting from low interest rates and was buying companies that stood to benefit from “long-term tailwinds”.

“We are big believers in the migration of almost everything online, the revolution in life sciences, the shift to sustainable energy, a shortage of housing since the global financial crisis, the global travel recovery and the continued rise of the middle class in China and India,” he said. Rising inflation was “the biggest risk on the investment horizon”, he added.

While the activity of special purpose acquisition companies declined substantially in the second quarter as a result of more regulatory scrutiny and investor fatigue, transactions by blank-cheque companies still accounted for 10 per cent of M&A activity in the three months to June, down from 18 per cent in the previous quarter.

In April, Grab, south-east Asia’s most valuable start-up, agreed the largest ever merger with a Spac in a deal that values the company at $40bn. Meanwhile, Bill Ackman’s shell company, Pershing Square Tontine Holdings, agreed an unconventional transaction to acquire a 10 per cent stake in Universal Music that values the group at more than $40bn without taking the company public.

“This time last year it was still really bleak,” said Mark Shafir, global co-head of M&A at Citi. “Did I have a crystal ball that could have predicted this level of activity? The answer is no.”

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