Private-equity firms have a record amount of cash to deploy in 2020.
That signals a potentially big year for go-private deals, with firms such as Blackstone Group and Carlyle wielding war chests of roughly $1.45 trillion after raising their cash holdings by 12.4 percent in 2019, according to the financial-data provider Preqin.
The private-equity firm KKR, in November, reportedly approached Walgreens Boots Alliance about a go-private deal that could be the largest leveraged buyout in history. The transaction hasn't yet been sealed because of the large amount of financing required, but it could be wrapped up this year, according to Bloomberg.
One area that private-equity investors are looking at in 2020 is healthcare real estate, including medical offices and senior living spaces. Deals in the space have more than doubled over the past decade, representing more than $100 billion in 2018.
The struggles of last year’s initial public offerings of money-losing companies like Uber, Lyft and Pinterest point to the potential for more private-to-private sales. All three of those companies saw their share prices finish the year more than 20 percent below their debut prices.
As for private-equity firms themselves, their cash balances have risen every year since 2013 after falling the four years prior, in the wake of the global financial crisis. Still, how they generate more by moving out of previous investments will be a focus for investors and analysts.
“We are looking closely at the buyout strategies in private equity to see how they're going to get their exits,” Adam Taback, head of global alternative investments at Wells Fargo Investment Institute, told FOX Business. “You've got to look at, 'Do they start looking more at private-to-private sales as opposed to private-to-public,' because they are going to need to do exits.”