Private Equity Firms Explore New Exit Strategies Post-IPO, Reports Bloomberg
Photo by Markus Winkler on Unsplash
Private equity firms struggle with exiting investments due to limited IPO cash-out opportunities and the risks associated with leveraging portfolio companies' balance sheets for payouts. Hellman & Friedman addressed this challenge with Verisure Plc, conducting a partial IPO while extracting a €1 billion payout. They achieved this through debt issuance from a special-purpose vehicle, isolating the debt from Verisure’s balance sheet.
Key takeaways
- Private equity firms face a significant challenge in exiting investments, as highlighted in a recent Bloomberg report
- Traditional initial public offerings (IPOs), although gradually recovering, offer limited avenues for complete cash-out strategies
- Simultaneously, leveraging portfolio companies' balance sheets to fund payouts through debt issuance poses risks, potentially deterring future equity investors
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