US drives global PE-backed IPO activity in 2012
London, 20 December 2012
| Pricing |
|Company||Sponsor||Exchange|| Gross proceeds |
| Market value |
|12-Jul-12||IHH Healthcare Bhd||Abraaj Capital||Kuala Lumpur, Singapore||2,115||7,095|
|24-Apr-12||Banco BTG Pactual SA||JC Flowers||Sao Paulo, Amsterdam||1,726||14,726|
|10-Oct-12||Realogy Holding Corp||Apollo Global Management LLC||New York||1,242||3,676|
|20-Mar-12||Ziggo||Warburg Pincus LLC, Cinven Ltd||Amsterdam||1,220||5,181|
|14-Mar-12||Allison Transmission Holdings Inc||Carlyle Group LP, Onex Corp||New York||690||4,172|
|3-May-12||PetroLogistics LP||Lindsay Goldberg LLC||New York||595||2,363|
|21-Mar-12||Vantiv Inc||Advent International Corp||New York||575||3,664|
|28-Mar-12||Rexnord Corp||Apollo Global Management LLC||New York||490||1,693|
|11-Apr-12||MRC Global Inc||Goldman Sachs Capital Partners||New York||477||2,131|
Global private equity-backed IPOs faced stiff headwinds in 2012, with companies raising US$20.5b through 103 IPOs in the first 11 months of this year–almost a 50% drop – compared to 2011, when US$38.6b capital was raised in 116 deals. While global trends saw Asia-Pacific as a key driver of global IPO activity this year, PE-backed IPO activity occurred mostly in the US, according to EY.
- US accounts for 77% of global PE-backed IPOs
- PE-backed IPOs see 11.4% average increase on first day of trading
- Pipeline could see 57 PE-backed companies raise around US$12b
Sixty-seven deals went public on US exchanges in 2012, accounting for 77% of the total capital raised in the year-to-date (compared to US$29.6b and 62 deals in the US in 2011). Asia-Pacific recorded 31 deals raising US$3.3b, accounting for 16% of total proceeds (compared to US$6.0b and 43 deals in 2011). Nearly two-thirds of Asia-Pacific’s proceeds came from one large deal, the July listing of Malaysian hospital operator IHH Healthcare, which raised US$2.1b in a dual listing on the Kuala Lumpur and Singapore exchanges. In Europe, there were only five deals in 2012 that raised US$1.4b (compared to US$2.9b and 11 deals in 2011).
Jeffrey Bunder, Global Private Equity Leader at EY says:
“Lowered investor confidence on continued concerns around macroeconomic growth equated to lower volumes of IPOs in 2012. However, those deals that priced during the year generally performed well on the first day of trading – and more importantly, the majority of those companies successfully held on to those initial gains.”
PE-backed IPOs perform well in secondary trading
On a market-weighted average basis, PE-backed IPOs saw an average increase of 11.4% in their first day as a public company. And most have held on to those initial gains, with PE-backed deals returning an average of 14.1% from their offer price as of early December. This compares with 9.5% for the overall market1. Performance also compares favorably with most equity indices. In early December, the S&P 500 had returned 13.5%, and the MSCI World index of developed market stock exchanges returned 11.8%.
Pipeline could see 57 PE-backed companies raise around US$12b
The volatile markets have curbed the number of PE-backed IPOs companies filing for IPOs. In the second half of the year to the end of November, 30 companies had filed for IPOs, down from approximately twice that number in the first half of the year, and a fraction of the 132 companies which filed in the first half of 2011.
However, there are currently 57 PE-backed companies in registration, expecting to raise more than US$12b in total proceeds. Some of the largest companies currently in the pipeline include Intelsat, (which was acquired by BC Partners and Silver Lake from a consortium including Apollo Global Management, Apax Partners, Madison Dearborn Partners, and Permira Advisors) in July 2007 for US$16.4b; and Avaya Holdings, which was taken private by TPG and Silver Lake Partners in June 2007 for US$7.9b.
PE-backed IPOs activity saw an increase in the emerging markets
There were 4 PE-backed deals that exceeded US$1b in proceeds in 2012, compared with 7 last year and 10 in 2007. The largest of these was the Malaysian Healthcare operator IHH Healthcare, which was the fourth-largest IPO to price globally in 2012, and the fourth largest ever on the Bourse Malaysia. The IPO raised US$2.1b and achieved a market capitalization of US$7.1b, making it one of the largest listed healthcare providers in the world.
Outlook for 2013: Markets to remain choppy, but sponsors on their starting blocks
Bunder concludes: “As the new year opens, continued macroeconomic volatility suggests that markets could remain choppy through the first part of the year. PE sponsors will need to continue working with companies to instill best operating practices, keep debt levels manageable and make companies attractive to strategic, secondary buyers and IPO investors alike.”
Notes to Editors
How EY's Global Private Equity Center can help your business
Value creation goes beyond the private equity investment cycle to portfolio company and fund advice. EY’s Global Private Equity Center offers a tailored approach to the unique needs of private equity funds, their transaction processes, investment stewardship and portfolio companies’ performance. We focus on the market, sector and regulatory issues. If you lead a private equity business, we can help you meet your evolving requirements and those of your portfolio companies from acquisition to exit through a highly integrated global resource of 167,000 professionals across audit, tax, transactions and advisory services. Working together, we can help you meet your goals and compete more effectively.
EY is a global leader in assurance, tax, transaction and advisory services. Worldwide, our 167,000 people are united by our shared values and an unwavering commitment to quality. We make a difference by helping our people, our clients and our wider communities achieve their potential.
EY refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit www.ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.