Expect a private equity exit bonanza, says Grant Thornton
Eighty-five per cent of private equity executives expect to exit more than a quarter of their domestic portfolio companies in the next year. That’s according to Grant Thornton's Private Equity Barometer, which reported only ten per cent of respondents did not expect any exits.
The results of the survey also suggest an increase in dealmaking activity will be on the cards. Sixty-seven per cent of respondents expect the volume of new private equity investments in the coming 12 months to increase, compared to 27 per cent who expect them to stay the same. Only 6 per cent expect to see a decrease in activity.
Mustafa Abdulhusein, partner in Grant Thornton’s Midlands corporate finance team and a private equity specialist, said: "Most private equity houses feel that the time is right to exit a significant part of their existing investments in the UK. Investors are also enthusiastic about new deal opportunities, particularly smaller public companies wanting to delist.”
The quarterly survey of more than 100 private equity executives in the UK found that more than three quarters (76.5 per cent) expect to exit up to 50 per cent of their portfolio. Fourteen per cent expected to depart from up to 100 per cent of their portfolio.
In terms of exit routes over the coming 12 months, 76 per cent of respondents plan to complete a sale of portfolio companies to trade bidders, while 49 per cent plan to complete a secondary buyout and 14 per cent said they would exit at least one portfolio company via an initial public offering (IPO).
In terms of type of investments, 15 per cent of private equity respondents said they were planning to invest in publicly listed companies over the coming twelve months. A staggering 87 per cent plan to invest in buyouts compared to 43 per cent who are looking to take a minority stake.
"Given the turmoil the market has faced, there has been significant shake-out in the industry. Even though most of the respondents expect there to be fewer private firms in future, very few believe that their own firm will cease to exist. In fact, most still expect to achieve exceptionally high returns on their investments," said Abdulhusein.
