Deal activity in the middle market remained strong in the Q2 ‘10, continuing the solid rebound that started in Q4 ’09 and Q1 ’10. In Q2 ’10, both aggregate deal value and volume increased 26% and 2.9% from Q1 ‘10, respectively, for disclosed middle market transactions (Enterprise Value < $500 million and > $10 million).
Increases in deal value and deal volume are being driven by both strategic buyers and private equity firms. Attractive valuations in the middle market, improving economic conditions and record cash balances have caused strategic buyers to emerge from the M&A sidelines. In addition, the private equity community is increasingly active in the middle market, under pressure to spend uninvested capital and to realize returns on existing portfolio companies before the tax on capital gains increases in 2011.
Green private equity is on the agenda of virtually all institutional investors, with more than 90 per cent wanting exposure to the sector, according to a new survey of 110 institutional investors conducted by New Energy World Network, a publishing and events company focused on green investments.
The level of interest and commitment varies markedly across institutional investors, with most taking a cautious but positive step into the green sector. However, there is strong expectation in the private equity industry that the performance of green investments will improve over the next few years and that increased institutional allocations will follow. The challenge for green private equity managers is to accelerate the current levels of interest and future expectations into actual commitments into their funds sooner rather than later.
It is clear that these LPs are giving much consideration to their green investment strategies but are holding back until they have more positive performance information on which to base their investment decisions and have overcome a range of other concerns and obstacles.