Private-equity companies look to each other to solve their problems
IF YOU are looking for a way out, don’t forget the way you came in. For private-equity firms that want to sell portfolio companies, there are three big exit routes: an initial public offering (IPO), a sale to a trade buyer, or a sale to another private-equity firm (also known as a “secondary buy-out”). Market volatility has led private-equity firms to cancel several IPOs this year, among them New Look and Matalan, two British retailers, and Travelport, an American travel company. Sales to trade buyers continue to tick over. But the real activity has been in the secondary market.
According to Preqin, a research firm, there have been $3.9 billion-worth of secondary buy-outs so far in 2010, compared with $5.9 billion in all of 2009. To date, the biggest deal of 2010 is a secondary buy-out, Bridgepoint’s sale of Pets at Home, a British pet-shop chain, to Kohlberg Kravis Roberts for GBP955m ($1.5 billion). On February 23rd 3i added to the list by agreeing to sell Ambea, a Scandinavian health-care firm, to Triton for €850m ($1.2 billion). ...