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Breaking Down the Private Equity-Backed IPO Landscape - June 2016

by Anthony Leung

  • 14 Jun 2016
  • PE

One particular aspect of exit activity that has been heavily scrutinized by stakeholders is the public market. Preqin’s Private Equity Online recorded 25 Initial Public Offerings (IPOs) and private placements in Q1 2016 valued at a total of $3bn, compared with 65 valued at an aggregate $17bn in Q4 2015. Amid this recent slowdown in portfolio companies exiting through public channels, we explore the make-up of the IPO landscape in recent years.

As shown in the chart above, private equity-backed IPO activity has increased since 2008 (excluding 2012), peaking in 2014 with 324 exits in the public markets for an aggregate $98bn. As the IPO market slowed in 2015, there were fewer exits and a 30% reduction in aggregate exit value to $69bn. Activity did increase in H1 2015 compared with the previous year, although there was a fall in aggregate exit value, while H2 2015 experienced declines in both metrics over the same period of 21% and 38% respectively. As a proportion of all exit types, IPOs & private placements represented an average of 14% each year from 2006 to 2015, compared with 39% for trade sales and 24% for sale-to-GP exits.

Since 2013, Asia has hosted a growing proportion of IPO & private placement exits: 26% of these exit types were finalized in Asia in 2013, rising to 37% in 2015. By contrast, North America has represented a diminishing proportion globally from 41% in 2013 to 25% in 2015. However, in terms of aggregate exit value, Asia-based IPOs & private placements represent a far smaller proportion of value realized due to a lower mean exit size. In 2015, Asia accounted for 19% of global exit value, behind Europe (46%) and North America (28%). The proportion of aggregate exit value realized in Europe increased from 39% in 2013 to 46% in 2015, while the corresponding proportion in North America fell from 42% to 28% over the same period.

The consumer and retail sector has completed the highest number of IPO & private placement exits in 2016 so far, with 16 exits generating $3.6bn in aggregate exit value and representing 25% of the market share. The industrials sector, which produced the highest number of exits from 2010 to 2015, has had 12 IPOs & private placements in 2016 securing a total $2bn, bolstered in part by Apax Partners’ secondary offering of Auto Trader for £853mn in February 2016. Excluding this result, the business services sector has consistently recorded the highest aggregate value of IPOs & private placements from 2009 to 2015.

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