With confidence levels continuing to soar at record highs, the investment market remains awash with Private Equity funds according to the latest Deloitte Private Equity Confidence Survey.

The survey of over 140 private equity funds (PEFs) in Australia and New Zealand shows that although vendor price expectations remain high, investment activity is expected to increase.

Deloitte Corporate Finance partner, Richard Young said 86% of respondents expect to be net buyers, which is 9% increase to the previous quarter and the highest response since the inception of this survey 5 years ago.

“A record 61% of respondents, the highest result in 18 months, expect the volume of transactions to increase over the next six months.

“Despite a slight downturn in the expected performance of economy over the next six months for the second quarter in a row, not one respondent expected a decline in the performance of their portfolio companies.

“A significant 79% of respondents remain confident their portfolio’s performance will improve over the next six months,” Mr Young said.

“This quarter 82% of PEFs predicted the availability of debt finance will remain the same in the next six months, which is almost a 20% increase on the last quarter.

“This is no surprise as the views reflect the importance that the banks have in the financing of private equity banker transactions.

“PEFs expect deal volume to increase concurrently with entry multiples.  This suggests there is no concern about the increasing deal prices and that there are still quality investment opportunities available,” Mr Young said.

Overview of key findings:

• 71% expect a stable economy over the next six months, however a small but increasing proportion (25%) expect a cooling of the market
• the proportion of PEFs expecting improvement in the financial performance of their portfolio companies increased for the fifth consecutive quarter to 79%
• the proportion of PEFs expecting to be net buyers over the next six months has increased for the fourth consecutive quarter to 86%, the highest response in the history of this survey
• 82% expect the availability of debt finance to remain the same
• a quarter of the respondents (25% up from 7% last quarter) expect greater difficulty in raising funds.