IPOs: Keeping afloat in 2010

Greg Gille
12 July 2010

Tweet
Facebook
LinkedIn
Google plus
Send to

Following a lull in private equityтbacked flotations over the past two years, 2010 is seeing some light at the end of the tunnel. While private equity assets are not exactly flooding the market, things are looking promising as Greg Gille finds out

The past couple of years are best left forgotten for private equity, and flotations are certainly no exception. unquote" recorded only five IPOs in 2008, amounting to a measly €508m return for private equity firms. 2009 saw a timid improvement with seven deals worth €1.6bn, but IPOs still accounted for only 3% of all exits as opposed to 10% in 2007.

Given the state of the global economy over the past two years, it would have been far-fetched to expect more. That said, the market rally witnessed in the middle of 2009 led many to believe that private equity assets would go public en masse in 2010, and announcements made in January seemed to corroborate that theory. However, the following months dismissed the prediction as wishful thinking. In the UK plans for New Look and Travelport were shelved as market conditions deteriorated. What is more, 2010 has so far been characterised by market volatility, with EPiServer the latest listing to be axed.

Interestingly, the Nordics and DACH regions have been the most lucrative markets for IPO candidates so far this year, with four listings each already. Germany saw Kabel Deutschland and Brenntag list with market capitalisations of €2.1bn and €2.8bn respectively, while in Denmark Chr Hansen floated for €1.73bn. Buoyed by these two regions flotations have therefore seen a remarkable uptick despite the overall market uncertainty.

Overall, there were 13 IPOs in the first half of the year, exceeding the combined totals of 2008-2009 already. And while listings such as Médica in France have achieved a lower than expected return, other assets, such as BC Partners- and Cinven-backed Amadeus have fared better, reaping in this instance €1.45bn.

Furthermore, the exit landscape is reminiscent of the pre-crisis one: trade sales are accounting for 43% of all deals, followed by secondary buyouts at 30% and IPOs at 11% - percentages very similar to those recorded in 2007. Of course, the outlook for IPOs remains inexorably linked to macroeconomic factors impacting stock exchanges, but halfway through the year the market is keeping afloat.