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Private Equity Group is overhauling its exit strategy after accepting that the long-standing recession of initial public supply is unlikely to end soon.
Acquisition executives at the industry’s annual European Conference this week said they prioritize other options to close the investment.
“I don’t remember this type of growth stock investment in 20 years where I haven’t opened an IPO window for a long time,” said General Gabriel Kylaux, the Atlantic General at the Berlin Super Return event. “It clearly calls us to rethink the tactical aspects rather than the strategy.”
Acquiring companies have a record backlog of assets that are being sold without ageing, as higher interest rates and market disruptions make it difficult to float companies, sell at acceptable prices, or pressure investors to find other ways to return cash.
According to Dealogic, the amount of IPOs supported by private equity has been low since the 2021 frenzy, only nine times in Europe and the US and nine times in Europe and the US.
The private equity director for a large international company said the IPO is currently ranked behind the disbandment and minority sales as an exit option.
“The recent IPO is third on the list,” they said.
Permilla sold a minority stake in Golden Goose, a luxury sneaker company worth 2.2 billion, in January, after abandoning its IPO. Last year, EQT, reportedly considering a list of school business Node Anglia, eventually cashed out the old fund by selling it to a consortium containing one of the new funds.
According to the Private Equity Executive, sellers were increasingly securing sales by providing greater protection against risks, including earning outs, to buyers more protection against risks. “The toolbox is now open,” they added.
Executives hoped that US President Donald Trump’s election would lead to a revival of the IPO, but instead the volatility of his policy shut down the capital markets to most potential issuers.
In March, Permilla, Hermann & Friedman postponed the planned IPO of US software group Genesys, but Bain Capital and Cinven did the same on the list of German drug company Stada.
The large global asset manager’s private equity director said the list was “no longer” after Trump’s April 2nd tariff announcement.
The top deal maker of the world’s largest private capital company said that the “only thing worse” than the current IPO market is “aware that it is supposed to be compared to how it turned out.”
The structural changes in the market have made the list of companies difficult, they added.
Daniel Lopez-Cruz, InvestCorp’s private equity director, said the IPO market is “closed for private equity companies for all intents and purposes.”
He said the secondary market for acquirers to sell their assets to themselves with what is called continuing funds, or private equity fund investors to sell with those funds “a great help.”
Continued vehicles have become more popular in recent years as a way to return cash to fund investors. According to Jeffries, the private capital company sold $75 billion in assets in the secondary market last year. Most of it came into continued funding.
However, some executives remained positive about the possibility of an IPO coming back.
“Things can change very quickly,” said the head of a major European acquisition company. “There are companies in the pipeline looking at an IPO in nine or 12 months. That’s well prepared and go as much as possible.”
