CVC places Evonik shares as IPO markets wake up

John Bakie
22 February 2013

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CVC is the latest GP taking a more flexible approach to exiting its businesses, selling a share in chemicals business Evonik to institutional investors in preparation for an IPO.

The private equity backer, which bought a stake in Evonik from Rag Foundation back in 2008, has been looking to exit the business for some time, but tough conditions in public markets, particularly for private equity-backed flotations, have hampered the sale process.

CVC and Rag announced today that they have sold less than 10% of Evonik to local and international investors for more than €1bn and say the move is part of their strategy to achieve a listing for the company.

Christian Wildmoser, partner at CVC, said the business had strong interest when it attempted to list last year, but in the end markets were considered too volatile.

"The private placement puts us in a more positive position towards achieving an intended stock exchange listing with less effort and makes us less dependent on what is a volatile market environment," he said.

CVC's decision to take a slightly different approach in the face of difficult exit conditions is the latest in a string of developments suggesting GPs are being more creative and flexible when it comes to selling their portfolio companies. The move is similar to a private placement of Formula One Group shares by the GP last year.

Recent examples include KKR creating a joint venture with US retailer Walgreen as part of its exit strategy for Alliance Boots, which it bought in 2007 in Europe's largest ever buyout. Elsewhere, KKR and Permira sold various subsidiaries of portfolio company ProSiebenSat.1 before listing the core business early this year. And unquote" research has noted that the number of partial sales increased significantly in 2012.

Public markets also appear to be slightly more welcoming this year and a number of private equity-owned firms are gearing up for an IPO, including Taminco and Countrywide.

The sale of Evonik shares values the business at even more than the €11bn valuation for the flotation which was dropped last year, and many are expecting the business could float in the second quarter.