INVESTMENTS

Private Equity

The global private equity market continued to scale new heights during 2021, extending its rebound from pandemic-related uncertainty a year earlier.

Global deal flow powered to an estimated $1 trillion by value, almost doubling last year’s volumes and surpassing the previous peak reached in 2006-07. In parallel, many private equity firms came back to the market sooner than expected, raising new, larger funds, while competition for deals and valuations both increased. While deals were spread across sectors, transactions involving technology and tech-enabled businesses featured heavily, with digitisation and ESG emerging as central investment themes for the PE industry.

ADIA’s Private Equities Department (PED) had another busy year, deploying more capital than ever before. Direct investments accounted for 58% of PED's overall deployment in 2021, up from 55% in 2020, with the balance committed to funds. In total, PED completed 40 direct investments in 2021, up from 25 in the previous year, including 12 co-investments in early-stage companies alongside our venture capital partners.

While competition for deals was high in 2021, PED continued to benefit from its sector-driven investment approach, allowing its investment teams to derive insights across the full spectrum of opportunities and enabling better dialogue and alignment with the sector teams of core PE partners. The Department’s recent creation of a sector-focused operating advisor network will take this a step further by helping to deepen investment themes and assist with due diligence and value creation more broadly.

PED continued to participate in large transactions during 2021, such as investments in Medline Industries Inc., a privately held manufacturer and distributor of medical supplies, athenahealth, a provider of cloud-based software and outsourced billing services to physicians, Ardonagh, a leading insurance broker, and Mphasis, a global technology services provider.

PED made a number of growth-stage investments and was also able to source attractive off market, follow-on investment opportunities from its growing portfolio. In one such case, PED deployed additional capital as part of the merger of two of its portfolio companies, Constellation Automotive Group and CarNext, both digital marketplaces for used cars.

In addition, the Department continued to be proactive in monitoring and managing its existing portfolio, including using secondaries to concentrate the portfolio on preferred sectors and managers. PED also continued to integrate its venture capital activities into its sector-based portfolio to increase insights and capture later-stage venture and early growth investment opportunities.

From a sector perspective, PED remains highly focused on Technology, including a particular emphasis on enterprise software, which has played a mission-critical role during the pandemic and clearly demonstrated its resilience. Technology also continues to disrupt across sectors as companies contend with the need to modernize IT systems, enhance customer engagement on digital platforms and adapt to evolving workplace behaviours.

As in previous years, Healthcare also remains a priority as it continues to benefit from secular demographic trends, an acceleration in biotechnology innovation, and changes in the way medical products and services are delivered to patients. In addition, PED has increased its focus on early-stage life sciences companies that harness the power of data and artificial intelligence, for example through its participation in the $370m Series B financing of Generate Biomedicines, and $500m Series B financing of Eikon Therapeutics.

In Financial Services, digital transformation was a key theme during 2021, despite some concerns around elevated Fintech valuations. PED’s portfolio is already well positioned in financial services, with investments in capital intensive businesses that continued to perform well throughout the COVID-19 pandemic.

To capitalise on the ever-changing shifts within the Consumer sector, the Department will continue to seek investments in market-leading companies able to develop powerful, direct relationships with consumers through technology and service. One example of this strategy was the Department’s investment in U.S.-based Truck Hero, a branded automotive accessories business.

Based on its strong belief in the region’s growth potential, several years ago PED created dedicated teams focused on China and India-Southeast Asia. This has allowed it to expand its activity in the region over time and, in 2021, APAC accounted for almost 20% of total deployment. The team’s deepening GP relationships and ability to lead minority investments generated a number of commitments across India and China, and the Department completed its first investment in Vietnam. PED also completed its first transactions in Indonesia during 2021, leading GoTo Group’s fundraising round with a $400m investment, and investing alongside the newly-formed Indonesia Investment Authority (INA) in the IPO of telecom towers company Mitratel.

In 2022, PED anticipates a continuation of the high level of competition for attractive companies, choppy IPO markets, and the need to adjust to pandemic-related and geopolitical developments. Against this backdrop, the team will continue to build its internal capabilities, harness insights from its industry practices and operating advisor network, and enhance the quality of its dialogue with GP and corporate partners.