This year, private equity firms are spearheading a resurgence in deal-making activity. Recent transactions have showcased this trend, with Fidelity Information Services agreeing to sell a 55% stake in Worldpay to private-equity firm GTCR for $12 billion. The proceeds from this sale will be used by Fidelity to pay off debt and initiate stock buybacks. Another notable deal involved Duke Energy, which sold its commercial distributed-generation business to ArcLight Capital Partners for $364 million.
These developments bring hope to investment bankers who have faced a challenging environment, characterized by economic uncertainty, higher financing costs, and stricter regulations over the past year. Despite these headwinds, companies are increasingly motivated to divest noncore assets and concentrate on their most profitable business segments. Private equity firms are capitalizing on this opportunity.
According to Andrea Guerzoni, global vice chair of strategy and transactions at EY, private equity firms feel compelled to invest or return money to their limited partners due to technical reasons. This drives them to actively seek out deals and contributes to an expected increase in deal activity.
It is worth noting that the acquisitions made by private-equity firms primarily focus on enhancing their existing portfolios rather than expanding into new industries.
