Buyout Executives Bank Billions in Record Year for Firm Floats
(Bloomberg) -- A record number of private equity firms went public this year as deal-savvy buyout executives took advantage of a booming market for initial public offerings -- a trend that looks set to continue into 2022.
Six private equity firms went public in 2021, Dealogic data show, equalling the combined total of the previous five years. Collectively, the firms raised nearly $3 billion, almost double the previous record set two years ago, according to the data.
TPG Inc., which had $109 billion of assets under management as of Sept. 30, plans to list on the Nasdaq Global Select Market next year. In Europe, some of the largest private-equity firms including CVC Capital Partners and Ardian SAS are weighing similar moves, Bloomberg News reported earlier.
Private capital firms have been among the biggest winners in the finance sector over the past decade as institutional investors like pension plans and sovereign wealth funds have plowed billions into the asset class in the search for yield.
The decision for these firms to go public came as stock markets globally saw more companies list than at any time in the past 20 years, according to an Ernst & Young 2021 report.
Tapping public markets gives founders of the privately-held firms the option to cash out of the companies they set up, while also providing capital to help fund the further growth of their businesses.
Among the most high-profile deals in 2021 included the 2.9 billion-pound ($3.8 billion) IPO of U.K. private equity firm Bridgepoint Group Plc, which listed on the London Stock Exchange in July.
The industry – spanning strategies ranging from buyout to infrastructure and private credit – grew more than fourfold from just over $1 trillion in 2010 to $4.1 trillion at the end of last year, according to a Bain & Co. report released earlier this year.
Firms that have gone public this year have been handsomely rewarded.
Shares in Bridgepoint and French firm Antin Infrastructure Partners SA are both up around 36% this year.
The decision for some founders to cash out or cut their stakes comes as industry participants question whether the returns firms have been able to generate will be sustainable.
So much money coming into the asset class has led to fierce competition for deal flow and pushed up asset prices to record highs.
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