The information technology (IT) sector saw a huge jump in private equity investment in 2016, while investment in consumer products and services fell, according to the American Investment Council’s (AIC) 2016 Q4 Industry Investment Report released last week.
IT companies saw $165 billion in private equity investment last year, up $75 billion from 2015. With the increase, IT became the largest investment sector. The number of IT deals, however, remained roughly unchanged from the previous year.
The AIC report said there was a total $646 billion in U.S. private equity investment in 2016.
The second largest investment sector was business products and services (B2B) at $157 billion, a $9 billion decline from 2015. The number of deals in the sector also fell in 2016.
“This report shows private equity’s significant role in valuable innovation sectors of our economy,” AIC President and CEO Mike Sommers said. “From information technology to products and services, private equity investments fuel growth and job creation across industries.”
The third largest sector was consumer products and services (B2C) with $104 billion in private equity investment last year. The amount of capital invested in B2C was $68 billion less in 2016 than it was the year before.
Private equity investment in financial services also decreased in 2016 to $62 billion, from $87 billion in 2015.
“Despite economic and political uncertainty, these measures confirm private equity is relatively consistent in its continued investment in companies across all sectors and sizes,” AIC Vice President of Research and Investor Relations Bronwyn Bailey said. “We expect to see more capital deployed this year and competition by PE funds for successful deals, which will ultimately benefit economic growth.”