Global pension fund involvement in M&A plummeted in the second quarter to the lowest quarterly level since 2019, according to S&P Global Market Intelligence data.

Pension fund sponsors invested in 22 disclosed transactions that totaled $740 million from April to June. That compares to investing in 36 deals totaling $3.83 billion in the second quarter of 2022.

Quarter over quarter, the cumulative value of deals with pension fund involvement plunged 94.7%, an abrupt decline after a solid first quarter with 28 deals accounting for $13.95 billion in aggregate.

Pension fund involvement in M&A appears to be on track for a flat-to-slight improvement in 2023 compared to a year earlier, though encouraging signs of cooling inflation and speculation that interest rate hikes are near the end could encourage a stronger second half.

– Download a spreadsheet with data featured in this story. – Check out the second-quarter Data Dispatch on private equity investments in Asia-Pacific, excluding Japan. – Explore more private equity coverage.

Top transactions

Private equity was an investor in five of the 10 largest transactions that involved pension funds during the second quarter.

In the biggest deal with pension fund involvement overall, Toronto-based private equity firm Kilmer Van Nostrand Co. Ltd. was the target rather than an investor. Canadian pension fund OMERS Administration Corp. agreed to acquire a 20% stake in Kilmer for $303.7 million.

The second-largest transaction of the quarter was a $200 million funding round for Indonesia-based PT. Multidaya Teknologi Nusantara, which provides a feeding solution for fish and shrimp farming. Private equity firms Temasek Holdings (Pvt.) Ltd., SoftBank Investment Advisers (UK) Ltd., responsAbility Investments AG, Northstar Advisors Pte. Ltd., Abu Dhabi Growth Fund and 500 Global invested in the round, along with Malaysian government pension plan sponsor Kumpulan Wang Persaraan.

Wuxi Huaguang Environment & Energy Group Co. Ltd.'s $41 million deal to acquire a 49% stake in China Resources GCL (Beijing) Thermal Power Co. Ltd. from Usual Win Ltd. and GCL Smart Energy Co. Ltd. was the third-largest deal for the period.

Sector exposure

The technology, media and telecommunications sector was the most attractive sector for pension funds in the first half, investing in deals with a total value of $12.95 billion. The financials and energy sectors followed with $660 million and $320 million, respectively.