Global PE-backed IPO activity declined in Q2 2012
- Brazil breaks long IPO drought with two PE-backed deals
- Asia-Pacific saw smaller PE-backed IPOs
- Energy sector deals led the way in Q2
- PE-backed companies in the pipeline to raise more than US$16b when market reopens
London, 24 JULY 2012 –Global PE-backed IPO activity slowed in Q2 2012, with global sentiment reversing sharply in May, as the debt crisis re-intensified in Europe and led to renewed concerns for a global slowdown. A total of 25 PE-backed companies worldwide raised US$5.3b; this compares with 35 PE-backed IPOs that raised US$6.0b in the previous quarter (an 11% decline in capital raised and 29% drop in volume), according to Q2 2012 Private Equity, Public Exits quarterly analysis by EY.
This quarter's activity was concentrated in the Americas and to a lesser extent, Asia-Pacific, with only one PE-backed IPO in Europe in the second quarter. Companies in the Americas raised US$5.2b across 15 IPOs, while there were nine companies taken public on Asia Pacific exchanges, raising US$140m in the aggregate.
Jeffrey Bunder, Global Private Equity Leader at EY comments:
“Despite the recent decline in activity, there is still an optimism associated with the significant pipeline of companies looking to go public. Among these companies are a number of PE's largest acquisitions from the 2006-2007 timeframe that are exploring exit alternatives. With so much volatility in the capital markets, companies need to be more nimble in order to react when the IPO window re-opens.”
Brazil breaks long IPO drought with two PE-backed deals
Brazil broke a long drought of IPOs in April, when PE-backed Companhia de Locacao das Americas (Locamerica) went public on the Bovespa Stock Exchange. It was the first IPO in Brazil in nine months. The car rental company, backed by BV Empreendimentos e Participacoes SA, raised US$146m in its market debut. Locamerica was quickly followed by Banco BTG Pactual, the largest IPO to price in Brazil since 2007, when Banco Santander went public. BTG raised more than US$1.7b in the offering and achieved a market capitalization of more than US$14.7b.
Jeffrey continues, “Despite Latin America's difficult market conditions for IPOs at the start of the year, Brazil is witnessing a greater acceptance of PE-backed growth companies — and this has had a positive impact on IPO activity across the region. Emerging markets' stock exchanges continue to be a key alternative route to access capital.”
The US continued to drive global PE-backed IPO activity in Q2 2012, with13 IPOs that raised US$3.3b on US exchanges. This represented 7.7% of total capital raised globally. The largest PE-backed IPO in the US in Q2 2012 was the US$595m IPO of the US propylene manufacturer, PetroLogistics LP, which listed on New York Stock Exchange (NYSE). The second largest PE-backed IPO was by the US pipe distributor, MRC Global Inc, which raised US$477m on NYSE. PetroLogistics and MRC Global were the ninth and eleventh largest IPOs globally in Q2 2012.
Asia-Pacific saw smaller PE-backed IPOs
Asia saw nine PE-backed IPOs, raising just US$140m. With an average deal size of just US$15m, much smaller than in previous quarters. However, despite the dearth of exits, PE continues to play an active role in the region's capital markets and we expect to witness more activity in months to come.
Energy deals led the way in Q2
The energy industry was Q2's most active sector, with three deals valued at US$1.4b in total, accounting for 26% of the quarter's total PE-backed proceeds. The largest deal was the May launch of PetroLogistics, which raised US$595m on the NYSE. Other offerings in the sector included SCF Partners'-backed Forum Energy Technologies, which raised US$436m, and First Reserve-backed Midstates Petroleum Company, which raised US$359m in its market debut.
Jeffrey concludes, “While PE-backed IPO activity continues to be challenged, numerous portfolio companies are intent on filing and are taking the necessary steps in preparation. Among them, Intelsat, backed by Silver Lake Partners and BC Partners and Domus Holdings, backed by Apollo Global Management have the potential to raise over US$1.0b. In total, 20 companies backed by PE firms filed in the second quarter, with a potential aggregate value of more than US$5.5b. These companies are in addition to an already robust pipeline of PE-backed firms seeking to raise more than US$16b.”
About the report
Private Equity, Public Exits is published quarterly by EY to provide insight and analysis on capital markets trends as they apply to the private equity-backed IPO market. Original data is sourced from Dealogic.
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