Rising Prominence of Exits via IPOs for PE-backed Companies Based in UK – March 2014

by Catriona McCarron

  • 24 Mar 2014
  • PE

According to Preqin’s Buyout Deals Analyst, 18% of divestments of UK-based private equity-backed portfolio companies in 2014 YTD have been through initial public offerings (IPOs) or secondary stock offerings – the highest proportion of exits from British portfolio companies via public markets since 2006. 

In 2014 YTD, IPOs and secondary stock offerings of UK-based portfolio companies have contributed an aggregate exit value of $2.68bn, accounting for 50% of total value of exits in 2014 YTD, 26 percentage points higher than in 2013.  Within this, British retailers in the consumer & retail universe have accounted for half of all private equity-backed IPOs and secondary stock offerings in 2014 YTD.

Since 2006, IPOs and secondary stock offerings of private equity-backed companies based in the UK have commanded an average of 8% to the total proportion of exits in terms of number, with lows of 2% in 2008 during the global financial crisis and highs of 12% in 2009 (70% of which took place in the second half of 2009).  As for aggregate value of IPOs and secondary stock offerings of UK-based portfolio companies, 2013 recorded the highest aggregate value of exits through public markets with $7.52bn raised according to Preqin’s Buyout Deals Analyst. The largest IPO of a UK-based portfolio company in 2013 was the listing of Blackstone- and CVC-backed Merlin Entertainment Group on the London Stock Exchange, with shares priced at £3.15 apiece, raising £957mn. 

March 2014 has seen the IPOs of Poundland and Pets at Home launching shares on the London Stock Exchange on the same day. Poundland, a portfolio company of Warburg Pincus, raised £375mn through the sale of 125 million shares at £3 apiece, the higher end of the company’s IPO price range. The partial exit secured Warburg Pincus a 4.5x multiple and more than 50% internal rate of return on their investment, valuing Poundland at £750mn. Meanwhile, Kohlberg Kravis Roberts-backed Pets at Home listed 200 million shares at £2.45 per share raising a total of £490mn through the offering, which valued the company at £1.23bn, creating the largest private equity-backed UK IPO in 2014 YTD.

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