Europe’s private equity firms are buying US companies fastest since the financial crisis and are hiring more local staff to expand their reach across the Atlantic.
The region’s buyout funds have participated in more than $ 83 billion in US deals announced so far this year, backed by major acquisitions by Swedish EQT AB and France’s PAI Partners, among others. This has helped fuel a hiring frenzy for these investors and a number of their peers looking for COVID opportunities beyond their own backyards.
European Private Equity looks to the world’s largest economy recovering from the pandemic and the surge in deals, preparing it for the busiest year in the country since 2007. The booming US merger and acquisition market provides a natural home for the billions of dollars raised by the region’s buyout firms in ever larger funds that are under pressure to redistribute their money more globally.
The last big deal was signed last week when Sweden’s Nordic Capital made a $ 6.4 billion bid with New York-based Insight Partners for health software company Inovalon Holdings Inc to bring more new hires in the region by the end of the year, said Thomas Vetander, a partner who runs his US office in New York.
“We are hiring to keep up with the pace of business deals in the US, which we expect to be very active,” Vetander said in an interview. “The US simply has a large market share of the healthcare opportunities we are looking for – they are fairly homogeneous, largely private, scalable, and better suited to absorbing new innovations that come with changing consumer behavior.”
Buyout firms are pulling in ever larger sums of money as return-hungry investors look for better returns with low interest rates. Europe-based private equity funds raised $ 172 billion last year, more than 60 percent more than in 2019, according to data from Preqin. So far this year they have amassed about $ 120 billion, surpassing the total for 2019 as a whole.
In addition, the outlook for the US is promising – for now. Bloomberg forecasts the economy will grow 6.2 percent this year, up from 4.7 percent in the eurozone as consumer spending rebounds. Nonetheless, fears that the spread of the delta variant of the coronavirus could put a strain on global demand have been rising lately in global markets.
Paris-based PAI Partners closed its first on-site deal in the US this month after forming a team in 2019 to look for such opportunities. The company paid approximately $ 3.3 billion to purchase Tropicana, Naked, and other juice brands from PepsiCo Inc. through a new joint venture with the soft drink heavyweight.
“You can assume that we will be more active in the US,” said Maud Brown, one of PAI’s main partners in the transaction, in an interview.
Sweden’s EQT has been one of the busiest buyout firms in the States lately. It agreed to purchase the London-listed FirstGroup Plcs iconic yellow school bus unit and other assets worth $ 4.6 billion in May, before partnering with Goldman Sachs Group Inc. in July.
EQT hired more than 30 people in the United States this year, up from 250 people already employed there, said a person familiar with their operations.
“To have more opportunities with higher returns and to play with the big fish, companies are pursuing the US market,” said Clement Pointillart, Executive Director of the Belgian growth investor Verlinvest, who recently hired additional US employees. Here “you have the most talents, the greatest innovative strength and a large market without any barriers to expansion”.
Other European firms expanding in the US include London-based healthcare investor GHO Capital Partners, which announced in July that it was opening a new office in North Carolina to accelerate growth opportunities. The Paris-based company Astorg Partners, which focuses primarily on health and technology in the USA, is also expanding there, according to a spokeswoman for the company.
The Swiss Partners Group Holding AG is also increasing its US focus, as more than half of its transactions already involve companies based there, the company announced in March. The company is hiring in all three US offices, including Denver, Houston and New York, and currently has 15 open positions in various areas, according to a spokeswoman.
“The US is a strategic focus for us,” said David Layton, who took office as the first sole US CEO earlier this year. “Here we see a lot of potential for future growth, especially on the customer side.”