Private equity firms invested more than $443 billion in U.S.-based companies last year, according to Private Equity Growth Capital Council's fourth annual investment report.
That’s a 27 percent increase over 2012.
“It indicates that private equity managers are seeing a lot of opportunity to make investment in the U.S.,” said Bronwyn Bailey, vice president of research with Private Equity Growth Capital Council in Washington, D.C. “It’s a positive message for the economy. More capital will help spur growth.”
For the third year in a row, Texas received the most investment from private equity with $87.4 billion in 282 companies. California, by comparison, was home to 304 companies that attracted $54 billion in investments.
“The biggest deal for Texas was a $25 billion Dell purchase,” Bailey told Private Wealth.
In addition to Dell, the companies that received the largest investments in Texas include BMC Software with $6.9 billion, Neiman Marcus Group with $6 billion, Apache with $3.750 billion and Forest Oil with $1 billion.
"Texas offers the best tax incentive of all with no levy on individual or corporate income," said Michael Cox, director with the William J. O'Neill Center for Global Markets and Freedom at Southern Methodist University Cox School of Business in Dallas.
Although Colorado ranked third in private equity investments last year, this year the Rocky Mountain state is a dark horse.
“Colorado has slipped to number 13,” Bailey said. “A lot of the states’ success last year had to do with one or two investments.”
Pennsylvania, New York and Florida were among the top five, as they were in 2012. States that moved up on the list include Virginia, which jumped from sixteenth to seventh, Maryland, Delaware and Minnesota, which all moved into the top 20.
"The companies in states across the country that receive private equity investment are able to expand their businesses, develop new innovations and hire workers and this report highlights the important contributions of private equity in the U.S. economy," said Steve Judge, president and CEO of the Private Equity Growth Capital Council.
Among sectors, more than half of private equity capital went to the information technology and consumer-based industries, with IT growing from 18 percent to 28 percent and consumer products and services rising from 19 percent to 25 percent. Investments in energy dropped from 17 percent to 10 percent.
“IT companies are maturing and need that extra boost of capital,” Bailey said. “The biggest drop in energy indicates that the attraction to energy companies has leveled out a bit, but that doesn’t mean it has gone away completely.”
When measured by congressional districts, the most private equity investments were in Rep. John Carter’s 31st District in Austin, Texas, at $24.9 billion.
“By showing members of Congress how much private equity is impacting their district, it demonstrates that private equity has a big impact on their economy,” Bailey said.
In Pennsylvania, Rep. Mike Doyle’s 14th District secured $24.8 billion in funding and Rep. Carolyn Maloney 12th District in New York gained $13.7 billion.
