Private equity groups sell stakes at discount on expectations valuations will stay low (

Private equity groups sell stakes at discount on expectations valuations will stay low


Sponsors traditionally sell a fraction of their portfolio company in an initial public offering, then try to sell down the rest of the stake at increasingly high prices over the following years.

Followons were badly hit by last years stock market declines, with sales by private equitybacked companies dropping more than 70 per cent, according to Dealogic data, as investors hoped to ride out the downturn.

However, sales have started to rebound despite the fact that valuations for the most recently listed companies are still languishing well below their peaks.

Private equitybacked followons in the US are up 180 per cent year on year, but almost twothirds of the deals were priced below the companies IPO, according to a Financial Times analysis.

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Vista has been particularly active in recent quarters selling assets for a profit, having agreed the 4.6bn sale of Cvent to Blackstone in March and a flurry of sales last year.

Despite the lower prices, the pickup in followons is an encouraging sign for those hoping to see a revival in the market for IPOs later this year.


Followon share offerings have rebounded even as prices have languished below IPO heightsPrivate equity groups are increasingly selling shares in portfolio companies at a discount to the price at which they went public, in a sign they do not expect stock market valuations to regain their previous highs soon.

Socalled followon offerings of shares in previously listed companies are a key way for private equity groups to monetise their investments and return cash to investors.


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