Boom in U.S. Investment Deals: Private Equity Giants Invest Heavily

American private equity firms invested over $160 billion in the last quarter as they prepare for a full rebound in the deal market. Ares, Apollo, Blackstone, and KKR collectively reported investments totaling $162 billion between April and June, with Apollo accounting for more than 40 percent of the total sum. Leading managers of these firms indicated increased preparation for rising merger and acquisition activities as the U.S. Federal Reserve nears an interest rate cut. "The deal market is back," said Scott Nuttall, Co-CEO of KKR. "This year, we not only have an open market but also a backlog of deals coming to market. Therefore, we are optimistic." According to data provider Preqin, private equity firms have more than $2 trillion in unused capital—funds committed but not yet invested. However, an 18-month slowdown in deal activity, triggered by the Federal Reserve's aggressive interest rate policy, has made it difficult for firms to sell existing investments and return capital to their investors. Signs indicate that the slump in deal activity is gradually easing. Buyout activity has increased 28 percent to $471 billion so far this year, according to data from LSEG. Nevertheless, this is still well below the boom years of 2021 and 2022. Due to the sluggish market for pure private equity deals, large alternative asset managers have instead invested their capital in loans and infrastructure. Apollo, which invested $70 billion in the last quarter, allocated $11 billion for the construction of an Intel chip factory in Ireland. More than 13 percent of the $34 billion invested by Blackstone went towards a $7.5 billion debt financing package for technology company CoreWeave. Since the end of the quarter in June, there have been several high-profile buyouts. Apollo closed a series of billion-dollar deals, including the acquisitions of the British parcel delivery group Evri and the gaming company Everi. Co-President Scott Kleinman estimated that the firm has completed five deals worth a total of $15 billion, including debt, in recent months. "Our deal pipeline looks strong from here," he said. Meanwhile, KKR announced buyouts of the broker-dealer Janney Montgomery Scott, the acquisition of educational technology firm Instructure for $4.8 billion, and a joint venture with T-Mobile to acquire the broadband provider Metronet. This week, private equity firms TowerBrook Capital Partners and Clayton, Dubilier & Rice won a takeover battle for U.S. health IT provider R1 RCM with a $9 billion bid, which is expected to be one of the largest buyout deals of the year. "My briefcase indicator remains full and suggests that we should see increasing transaction activity," said Jon Gray, President of Blackstone. "As we see interest rates fall and markets become more favorable, more people are considering selling assets. I think when the IPO market reopens, we should see more activity." Credit-focused investment manager Ares also reported a rise in new buyout activities. CEO Michael Arougheti told the Financial Times that banks and private credit funds are increasingly being asked to structure new buyout financing packages rather than refinancing existing debts or financing small acquisitions. Next week, more private investment groups such as Brookfield, Carlyle, and TPG are set to present their results.