Private equity: IPO pipeline swells to bursting point
AA slumps as PE exits; secondary buyouts down 25%
The weak performance of several recent IPOs is casting a shadow on one of the market’s most fertile sources of dealflow: private equity firms. Private equity sponsors have leapt at the recent opportunity to exit investments via IPOs with robust enthusiasm, with, as Deutsche Bank’s Henrik Johnsson, European head of high-yield capital markets, told this magazine in April “every single private equity asset that has been owned for more than one year looking at an IPO”.
Recent research from EY seems to confirm this: by the end of March private equity backed firms had priced 46 IPOs in 2014 raising $17.4 billion – more than double the equivalent figure for 2013.
“All firms are lining up assets to IPO, and investment bankers are talking about the significant premium they can get from an IPO. Everyone wants to get things out there in an orderly rush – people are not expecting that appetite will be this frothy for very much longer”
Graham Elton, Bain & Co
“IPO appetite has a huge impact on PE on both the sell side and the buy side,” Graham Elton, head of private equity for Bain & Co in EMEA, tells Euromoney.