Private equity (PE) investment has increased for the past decade. This will likely continue as the number of deals and the total amount of PE investments increase in the coming years.
Looking towards 2022, four charts will spotlight the sectors likely to draw PE investment, and provide an overview of the current PE market.
Overview of PE investment in 2022
The private equity (PE) sector saw a slight increase in investment activity in 2022, with top deals spiking in certain sectors. Over the year, GlobalData found that PE firms identified several lucrative areas, with some major funding rounds coming through.
Four charts below highlight how savvy investors could capitalise on market changes by developing strategies to manage risks and identify growth opportunities throughout the year. The first chart looks at the total number of deals carried out in each sector for 2022 and it gives us a snapshot into what was resonating with private equity investors at this time.
The second chart gives us a breakdown of venture capital investments, showing which sectors received large amounts of funding from VCs. Thirdly, a pie chart reflects interesting investor behaviour spurred by extreme volatility as they rotated more than expected into new sectors to hedge their plasticity risk exposure.
Finally, we are shown which countries benefitted most from PE deals across different regions; this provides an overall picture of which geographical markets were most attractive to early investors and those now taking larger stakes in different companies that focus on various areas such as healthcare or healthcare technology applications.
Chart 1: PE Investment by Sector
Private equity (PE) investment has seen a surge in recent years as investors seek alternative opportunities for growth in a volatile market environment. As we look towards the future, sector-focused PE investments will be even more influential for the industry.
This chart looks at the top 10 sectors for PE investment in 2022, highlighting the key opportunities for private equity investors.
Analysis of PE investment by sector
To understand how private equity investments held up in 2022, it is important to look at the data broken down by the sector. This chart illustrates the top 10 sectors for PE investment in 2022. Healthcare & Pharma, Information Technology & Communication, Financial services, and Industrials & Manufacturing comprise a majority of investments activity in this space. Energy & Utilities follows with a significant share as well at 13%. Finally, industrial Services, Basic Materials, Real Estate, Retail & Consumer Goods round out the top 10 sectors with single-digit share of PE Investments.
The Healthcare and pharmaceutical sector has seen significant inflows in hospitals and pharmaceutical companies due to COVID-19’s impact on global healthcare systems. IT & Communication was among the few beneficiaries of the economic aftermath of 2020 with businesses trying to digitise operations to stay afloat. Financial services continues to be an attractive avenue for investors as regulations and industry trends often create opportunities for value creation through M&A and restructuring moves. Similarly, Industrial products is home to large companies doing well in tough operating conditions. At the same time, Energy and Utilities houses some significant opportunities with ongoing decarbonisation initiatives pushing up demand across renewable energy sources like Solar, Wind etc.
These are just a few highlights from our analysis – understanding where investments are flowing helps investors focus their search on promising areas that can help generate higher returns on capital employed in time for 2022 onwards’ growth cycle.
Breakdown of top 10 sectors
The following chart highlights the breakdown of the top 10 sectors for private equity (PE) investment in 2022. While each sector has its challenges, the overall outlook remains positive.
In terms of top sectors, healthcare services saw the most deals completed with 119 investments. This was followed closely by Real Estate & Infrastructure, Technology & AI and Industrials & Chemicals, with 92, 86 and 81 transactions respectively. Meanwhile e-Commerce, Retail and Consumer Goods sectors recorded strong growth in terms of PE investment from 2019 to 2022 ($84 billion).
The Food & Beverages and Financial Services industries also saw significant activity with 76 and 73 investments respectively. Finally, Energy & Resources had 54 deals completed for $24 billion in 2022 alone. Overall, PE investment in the top 10 sectors combined amounted to 384 deals valued at $289 billion from 2019-2022.
Chart 2: PE Investment by Region
Chart 2 looks into the US’s regional breakdown of PE investment in 2022. It shows the top regions for PE investment and how much each region contributed to the total PE investment.
This chart provides an overview of the regional differences in PE and is an essential for understanding how PE investments have held on in the year 2022.
Analysis of PE investment by region
The global private equity market has shown signs of recovery in 2022, with the top 10 sectors for PE investment showing an increase of 59% compared to 2021. Furthermore, the size of PE teams and total capital commitments have also grown considerably. To gain insight into the distribution of PE investments across geographies, we present a chart detailing PE investments by region in 2022.
Asia Pacific accounts for most PE investments, with 54% of total transactions coming from this region. The US came in second, with 21% of investment deals based there and Europe next with 11%. Latin America and MEA each saw 4%, while Canada received 5%. This indicates a shift in behavior around PE investing from a primarily North American focus to include more deal activity from Asia Pacific and other regions over the past year.
Among these regions, there has been a significant increase in investment activity from South East Asia: Singapore and Indonesia witnessed large inflows into their domestic markets for the first time since 2020. This reflects an increased interest in markets beyond traditional European countries like Germany or France – which only experienced small increases this past year – potentially fueled by attractive tax incentives built into business incentives packages offered by many governments within these countries.
Overall, while North American markets are still leading on PE investments overall – they account for $459B out of $744B total global deal value – they are beginning to witness increasing competition from other regions around the world as strategies become more diversified in terms of geography and industry focus towards emerging economies offering potential returns not seen previously available within traditional European / US markets.
Breakdown of top 10 regions
In 2022, Private Equity (PE) investments flowed globally, with most investments targeting Europe and North America. According to industry data from Private Equity International, these ten regions attracted investment from private equity firms worldwide:
-Europe: 41% of global PE investments
-North America: 22% of global PE investments
-Asia Pacific: 16% of global PE investments
-Latin America: 8% of global PE investments
-Middle East & North Africa: 6.5% of global PE Investments
-Sub Saharan Africa: 4.5% of global PE Investments
-Russia/CIS countries: 2.3% of global PE Investments
-Canada & Caribbean Islands: 1.2 % of Global PE Investments
-Australia/New Zealand/Pacific Islands: 0.7 % of Global PE Investments
The top 10 sectors for private equity investment are likely to include technology, healthcare and biotechnology, real estate, energy and industrial products, consumer durables and apparel, financial services and banking, restaurants and hospitality services, agriculture and agriculture equipment, and travel & tourism services. While there is regional variation in which sectors are most investable in different areas around the world due to fluctuating macroeconomic conditions and differences in regulation across jurisdictions, it is expected that sectors traditionally favored by investors will remain attractive even in this era o economic uncertainty.
Chart 3: PE Investment by Type
Chart 3 is all about the types of PE investments. It takes a deeper dive into PE activity and explains the distribution of investments across various types. Private Equity firms largely chose to stay invested in existing industries in 2022, pushing investments to increase overall market value of their portfolio companies. As a result, the chart will illustrate the types of PE investments made in 2022.
Analysis of PE investment by type
Analysis of the type of PE investments in 2022 shows that private equity firms are looking to capitalize on existing market gains while diversifying their portfolios to protect against potential future market disruptions. The following charts provide insights into the sectors where PE investment has increased significantly since 2019.
1. Technology: Investment in technology companies saw the most notable rise of all PE investments in 2022, having more than doubled from 2019. Software, cloud computing, and IT Infrastructure were some of the dominant industries in this sector with most deals concentrated in VC-backed fin-tech start-ups and SaaS/enterprise solutions companies.
2. Consumer Staples and Discretionary: The consumer staples and discretionary sectors witnessed a healthy increase in investment throughout 2022 relative to 2019 due to elevated demand amid higher disposable incomes across developed markets. Food retail, online delivery services, food delivery platforms, restaurant/hospitality chains, and lifestyle/shopping centers were some of the biggest beneficiaries within this sector.
3. Healthcare: This sector saw significant growth with more deals focusing on pharmaceuticals, biotechnology companies, and health data analytics platforms, which proved especially attractive to investors looking for promising target companies within a fast-moving industry where digital transformation is gaining traction.
4. Industrial & Manufacturing: Investments in economic recovery themes such as green energy infrastructure facilities have been one of the key areas private equity firms invested capital into during 2022 despite challenges posed by protectionism concerns and trade tensions within different geographies during this period. Aerospace & defense was another major sector for PE investment primarily due to increased government spending on military defense programs worldwide coupled with efforts towards attaining global technological superiority through massive investments into research & development projects run mainly by start-ups backed by venture capitalists and other alternative financiers including private equity firms.
Breakdown of top 10 types
Private Equity (PE) investments differ from public debt and equity, making it a more attractive asset class for institutional investors. In 2022, PE investments have continued to maintain a leading position in the capital structure of major corporations and organizations, but there has been some shift towards certain sectors.
This chart looks at how PE investments in the top 10 sectors were divided: Manufacturing & Retail, Health Care, Financial Services & Insurance (FSI), Energy & Resources, Consumer Discretionary & Staples and Technology Media & Telecommunications (TMT).
In 2022, PE investment in the manufacturing & retail sector represented 33.8% of total PE investment globally. The health care sector accounted for 22%, while FSI held 16%. The energy & resources sector received 10% of PE investment share with consumer discretionary & staples at 9% and TMT with 8%.
The data suggests that the global outlook for private equity investors has remained steady over 2021 despite pandemic-related economic disruptions. Investors have consistently shifted towards industries that have witnessed rising value during the pandemic such as health care and online retail businesses. This trend will continue favoring certain sectors for private equity investments in 2021/2022.
Chart 4: PE Investment by Size
Chart 4 provides a snapshot of private equity (PE) investment in 2022 by size. According to the chart, mid-market deals accounted for most PE investments in all sectors, with larger investments accounting for the rest. It also shows that the amount of money invested in the mid-market increased significantly in 2022 compared to the previous year.
This article will explore the details of these figures and how they impacted PE investment in 2022.
Analysis of PE investment by size
Analysis of PE investment by size illustrates the impact that private equity funds had on the market in 2022. According to PitchBook’s 2021 Global Report, the top 10 sectors for PE investment in 2022 included technology, health care, manufacturing and consumer goods and services.
Small-cap investments accounted for 15 percent of total PE deals in 2022 at $1.6 billion, while mid-cap investments comprised 40 percent of PE deals at $4.5 billion. Large-cap investments comprised 45 percent of all PE deals with a total of $5.2 billion invested in that sector alone.
When broken down into regions, the largest investment goes to North America where 65% of PE money was deployed, followed by Europe and Asia (13%). The least amount goes to Latin America, which analysts have predicted could become a hotbed for venture capital activity due to its growing markets and economies. While there is currently no clear way to make cross-regional comparisons as far as investment size is concerned, one thing is clear—PE funds are becoming increasingly important within global markets as both equity holders and asset managers alike recognize high potential return investments combined with low risk buffers provided by these vehicles.
Breakdown of top 10 sizes
Size is an important factor to consider when evaluating the performance of a private equity firm. Here, we look at the breakdown of the top 10 sectors for Private Equity (PE) investment in 2022 based on size, according to data from Preqin’s Global Private Equity Report.
Small companies: Small companies with enterprise values (EVs) of less than $400 million received the greatest PE investment in 2022, with 23% of total PE investments directed towards this group.
Mid-market: Mid-market companies had EV’s between $400 million and $2 billion and saw 17% of total investments in 2022. This was significantly lower compared to 2019 levels.
Large-cap: Large-cap companies had EVs above $2 billion and were allocated only 11% of PE Capital in 2022, well below the 25% seen in 2019.
Mega deals: Mega deals for firms with EV over $10 billion attracted 16% of capital investments, a similar share as seen previously. This sector has been resilient despite speculation that mega deal activity within PE may have slowed down with underlying market uncertainty created by the pandemic and increased regulatory scrutiny globally.
Overall, the top 10 sectors that attracted private equity investments in 2022 was the Technology & Telecommunications sector, Healthcare, Industrials, and Consumer & Retail. These four sectors have seen an increase in investments due to the potential of higher returns and more efficient resources.
The four charts presented in this article spotlight how PE occurred in 2022, despite the turmoil from the start of the year.
Summary of key findings
As we approach the end of 2022, it is clear that while the COVID-19 pandemic has disrupted the global economic landscape, private equity markets have maintained their resilience. A sharp increase in PE activity across all industries regarding equity deals and exits evidences this.
This article analyzed four charts tracking PE investment in 2022 to provide an overview of trends and deal activity across various sectors. Key findings include:
- The healthcare sector was one of the most attractive sectors for PE investors and saw some of the largest investments during 2022.
- Technology was another strong investment sector; telecommunication, IT services and media were some of the most attractive areas for buyouts and investments.
- Consumer-related sectors also saw significant attention from private equity investors including retail, consumer durables and FMCG.
- Energy & Power was also prominent due to 2020’s “green wave” which spurred interest in renewable energy investments and biofuel projects featuring major players like Airbaltic Capital and Shell Ventures.
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