Private equity-backed exits at record pace in second quarter

IPO filings -- last 18 months/Source: Renaissance Capital LLC


Private equity firms exited buyout investments at a record pace in the second quarter so far as broader economic conditions have improved, according to Preqin Ltd.

Recovering to levels not seen since the onset of the financial crisis, buyout firms have sold 201 portfolio companies valued at $85 billion so far this quarter, 5 percent higher than the record established in the fourth quarter of 2010, when 325 exits with an aggregate value of $81.3bn were announced, the London-based research firm said in a statement.

Deals have been particularly prevalent in Europe, with 82 exits valued at $57.9 billion taking place in the second quarter, double the previous quarter’s $28.6 billion, Preqin said.

“Exit values are at record levels as fund managers take advantage of current market conditions to exit investments made both during the buyout-boom era and post-financial crisis,” said Manuel Carvalho, manager of private-equity deals at Preqin. “Capital is increasingly being returned to investors, and this will be committed to new funds if investors intend to maintain their current allocation levels.”

Half of the 10 largest transactions announced so far this quarter were deals made during the buyout boom of 2005 to 2007, while three exits represent realizations of deals made within the last two years.

The largest exit this quarter was the sale of Zurich-based Nycomed by Nordic Capital and Credit Suisse Group AG’s private equity group to Takeda Pharmaceutical Co. for 9.6 billion euros ($15.53 billion), Preqin said.

A strong U.S. IPO market represents one of the catalysts for this resurgence. To date, the 36 IPOs priced during April and May have already exceeded the 32 IPOs in the entire first quarter and represents the most active IPO period since 2007, said Renaissance Capital LLC, an IPO advisory firm.

Over the past year, more than 163 companies have filed with the Securities and Exchange Commission to list their shares, and are still waiting in line, according to EDGAR Online Inc.

According to Renaissance Capital, about 30 percent of offerings have priced above expectations so far this year, compared with 12 percent in 2010. Strong demand for IPOs among investors is definitely good news for private equity firms.

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