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PE Exits

EQT runs into the PE asset pileup

Lackluster demand for acquisitions and listings is causing headaches for PE firms as assets pile up.

For private equity firms, exiting portfolio companies has rarely been trickier than in today’s market.

Meager appetite globally for listings and acquisitions has caused a pileup of assets for many PE operators, who are struggling to find options for exit.

One firm looking to offload assets is EQT. Bloomberg reports the firm is reviewing options for London-based school operator Nord Anglia, including either an IPO or sale.

In the past three weeks, multiple sources have reported that EQT is looking to exit no less than five of its portfolio companies, including skincare group Galderma and property website Idealista. The firm is aiming for high price tags for many of them—in the case of Nord Anglia, they are considering a valuation of around $15 billion.

In the current market, selling seems far from an easy feat. In 2023, acquisition and public listing dealmaking in Europe fell significantly from the previous year—down 24.6% and 28.6% respectively, according to PitchBook’s 2023 Annual European PE Breakdown. In the US, PE exits hit a decade-low last year.

With a backlog of maturing investments, the pressure is on for PE firms to return capital to LPs, many of whom are no longer waiting patiently for liquidity. Having an excess inventory of portfolio companies is also causing firms to face a shortage of available capital for new investments.

Currently, it seems that there are fewer takers for PE-backed acquisitions than in previous years, while IPO activity is anticipated to remain lackluster for 2024. This means PE firms will have to find new sources to generate liquidity.

Secondaries, in particular continuation funds, have become all the rage—even the VC crowd has taken an interest. EQT’s CEO Christian Sinding has floated the idea of private stock sales for portfolio companies as a way to give capital back to LPs.

Whether the exit market for PE firms picks up this year remains to be seen. But if it doesn’t, a lot of investors, including EQT, will need to find something to do with their excess assets.

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