Global private equity and venture capital deal value surged in the second quarter as investors began deploying more capital after accumulating record-high dry powder.

Deal value jumped 42.1% to $175.73 billion in the second quarter from $123.65 billion for the same period in 2023, according to S&P Global Market Intelligence data. The number of deals declined 7.4% year over year to 3,021 transactions.

In the first half of the year, deal value increased 24.1% year over year to $309.82 billion, while the number of transactions shrank to 6,066.

Investors have started actively putting capital to work using the record high dry powder — capital raised but not yet invested — in the system, said Christian Westra, partner in the private equity transactions group at Ropes & Gray. "There is a sense that people have been holding on to capital for a lot longer than they would have wanted to or expected to," Westra said.

Private equity and venture capital firms globally held a record $2.62 trillion of total uncommitted capital as of July 10, according to Market Intelligence and Preqin data.

Westra also attributed the pickup in deal value to lingering expectations that interest rates and the cost of capital will decrease later in the year. "We're seeing inflation is getting better, and central banks are signaling in a more direct way that they do expect rates to start coming down later this year."

Jonny Myers, global head of private equity at Clifford Chance, said the consistency of pricing and terms are now more stable compared with the same time in 2023. "That doesn't necessarily mean lower pricing, but we're seeing confidence around debt pricing in the longer term," Myers said.

– Download a spreadsheet with data in this story. – Read about venture capital funding rounds in the second quarter. – Explore more private equity headlines.

June figures

Total transaction value in June climbed 15.6% to $41.24 billion, from $35.68 billion a year earlier.

Private equity entries in the US and Canada were up 28.4% to $17.47 billion, while deal value in Europe rose to $11.74 billion. In Asia-Pacific, deal value fell to $11.35 billion from $12.83 billion.

Globally, the number of deals in June dropped 14.5% on an annual basis to 975 from 1,140 transactions.

The technology, media and telecom sector had the most deal activity with 371 private equity-backed transactions.

Within the sector, application software recorded the highest number of transactions at 159, followed by systems software with 45 deals and IT consulting and other services with 32 deals.

Biggest deals

The biggest deal in June was Blackstone Inc.'s announced acquisition of a 40% stake in refrigeration and heating, ventilation and air conditioning company Copeland LP for $3.4 billion in pretax cash proceeds.

For the biggest funding round, a consortium comprising KKR & Co. Inc. and Singapore Telecommunications Ltd. announced an investment of S$1.75 billion in Singapore-based datacenter provider STT GDC Pte. Ltd.

Outlook

The US private equity market is expected to recover quicker than other markets, particularly in Europe, said Ropes & Gray's Westra.

"The amount of capital available in the US is much bigger relative to Europe. We do have strong guidance that the Federal Reserve is expecting to lower rates later this year," Westra said.