While teaming up on deals isn’t unusual, the amount of equity these state-backed investors are providing has jumped as buyout firms find debt more expensive. The Abu Dhabi Investment Authority is contributing at least £1 billion (US$1.3 billion) for EQT’s £4.5 billion takeover of veterinary drugmaker Dechra Pharmaceuticals Plc announced in June.
Deep-pocketed sovereign funds are deploying billions of dollars to get private equity takeovers across the line, helping grease the wheels of dealmaking in a year when other funding sources are drying up.
KKR & Co, EQT and Brookfield all turned to wealthy Persian Gulf countries to stump up a lot of the money for big-ticket deals in recent weeks. Sovereign wealth funds spent a record US$17.2 billion on such co-investments in the first half, up 24% from the same period last year, according to data provider Global SWF.
