Private equity groups are facing an increasingly tough market for offloading their portfolio companies, according to new figures from data provider Preqin.
The total number of so-called exits from businesses bought by private equity firms fell last quarter: just 343 portfolio companies were sold in the first quarter, a figure which is 19 per cent lower than the prior quarter and 15 per cent less than the same period a year ago, reports Mary Childs in New York.
The value of those exits — $62bn last quarter — has fallen for three straight quarters, from $72bn in the prior quarter and the recent peak of $125bn seen during the second quarter of last year.
“The rate of exits from buyout-backed companies has been slower this quarter, with fewer companies going public as market participants take a more cautious approach,” Christopher Elvin, Preqin’s head of private equity products, wrote in a press release, citing weaker public equity markets.
Trade sales, when a private equity firm sells a portfolio company to another company operating in the same industry, made up 63 per cent of the total buyout-backed exits in the first quarter — including all ten of the biggest exits in the period. That proportion, which Preqin says is a “long-term high,” is up from 51 per cent in the prior quarter.
Private equity struck 874 buyout deals in the first quarter, for a total $44bn, sliding from the post-crisis record of $137bn via 962 deals in the previous quarter, according to Preqin’s preliminary numbers.
Recent data from Dealogic showed that just nine initial public offerings priced in the first quarter, the worst quarter since the first quarter of 2009. No technology IPOs priced, for the first time that period.