Private Equity Buyout Volume Sets Record

A rush of multibillion-dollar corporate buyouts has catapulted the volume of private equity deals to their highest level on record, data show.

Monday’s deal by three private equity firms to acquire HCA Inc., the No. 1 U.S. hospital chain, for $21.3 billion helped lift the total volume of deals so far this year to $373 billion, financial data provider Dealogic said Tuesday.

That’s already higher than the full-year total for 2005 and higher than any other year on record.

The rise in private equity-backed deals comes as the volume of global mergers and acquisitions has risen to $2.18 trillion year to date, which tops the $2.13 trillion notched up during the same period in 2000 at the height of the Internet boom, Dealogic data show.

Private equity firms typically buy struggling or undervalued companies, restructure them and sell or take them public later, keeping a slice of any profit and giving the rest to the private equity firms’ investors -- major financial institutions, public pension funds and endowments, and wealthy individuals.

Investors have poured billions of dollars into private equity firms in recent years in search of better returns than stocks and bonds can provide.

In the last several weeks, three of the world’s largest private equity firms -- Permira and Cinven, both based in Europe, and New York-based Blackstone Group -- have cumulatively raised nearly $37 billion in capital, with Blackstone’s $15.6-billion fund the largest pool of capital ever raised by a buyout firm.

With private equity investors awash in money, experts predict even larger deals than the HCA acquisition to come.