Swathe of PE exits expected this year

The expected heightened activity in the exit market comes as a large number of private equity firms look to achieve strong returns in order to attract investors to their new funds. Grant Thornton's survey showed that 57% of respondents plan to sell more than a quarter of their portfolio companies over the course of 12 months. This compares to only 7% saying they would exit over a quarter of their portfolio companies when asked in the first quarter of 2010.

An expected increase in exits is not only driven by the need to raise new capital; the exit environment is also said to be improving. "We haven't seen such a surge in planned exits in years – more than half of UK private equity firms expect to sell more than a quarter of their portfolio. They are encouraged by improving exit conditions, with strategic investors increasingly prepared to outbid private equity players," says Mo Merali, head of private equity at Grant Thornton.

Recent exits show that the improving environment for disposals is not only having an effect among UK private equity firms. Nordic Capital recently sold its stake in Nycomed to Takeda Pharmaceuticals for an enterprise value of €9.6bn, making it the largest European private equity sale for several years. Although a return on investment was not disclosed, considering the enterprise value of Nycomed at the time of acquisition in 2005 was €1.8bn, it is clear that the exit suggests Nordic Capital is looking to start fundraising in the not too distant future.

Nycomed was not the only recent large healthcare exit. On the same day the Nycomed sale was disclosed, Cinven announced the sale of Phadia AB for an enterprise value of €2.47bn. These large exits add weight to Grant Thornton's survey findings and unquote" has noticed a significant increase in exit activity over the last month.

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