The biggest equity firms of Europe have hit a big time on fees over the last few years. Bankers are now are trying to encourage them that this is the perfect time to seize on the desire of public investors to grab a slice.
According to the advisers, large number of investment bankers are pitching firms including Ardian SAS and Permira on pursuing an initial public offering and there are at least few signs of openness to the idea. A Franco-America private firm, L Catterton has held early talks with banks about the probability of a listing. However, the equity firm backed by billionaire Bernard Arnault hasn’t decided whether to go ahead, said advisers. CVC Capital Partners has been drawing up the idea internally.
The early success of IPOs by Paris-based Antin Infrastructure Partners SA and Britain’s Bridgepoint Group Plc, whose shares rose 26% and 29% respectively on their current debuts, have persuaded banks to pitch vigorously to other buyout firms. The more subdued response to Petershill Partners by Goldman Sachs Group Inc.’s listing in London hasn’t stamped out enthusiasm for the sector.
According to bankers, it requires a certain size and some diversification for a successful listing of a private equity firm. Having $11.6 billion (10 billion euros) of assets under committed capital, or management is seen as the cutoff point to get an acceptable level of valuation and profit. “Ardian, Permira, and CVC are among the European firms that would be ready for public markets and fit this profile,” said advisers.
The possibility of an IPO has been informally discussed by CVC, although there aren’t any solid preparations underway. Financial advisers said that, “We have been pitching to Permira and Ardian in the recent weeks. Other possible candidates featured on the scratch of bankers include Apax Partners and Inflexion Private Equity Partners.
However, spokespeople for each firm declined to comment.
The shares in Sweden’s EQT AB have increased to about 430% since it joined the stock market in 2019, while stock in Partners Group Holding AG of Switzerland has trebled in five years. The biggest private equity firms of U.S., such as Blackstone Inc., Carlyle Group Inc., and KKR & Co. listed in the last couple of decades and have all witnessed their market values soar.
Global head of private equity at KPMG, Robert Ohrenstein said, “Public markets remain receptive to the private-capital investment vehicles at the higher end of the market, especially since many have perceptible track records of outclassing other asset classes over an extended cycle.”
Ohrenstein further added some of the benefits of an IPO include providing stock incentives for staff and liquidity to aid succession planning. Stock listings also give retail shareholders and smaller institutions an exposure to an asset class wherein they can’t directly invest.