Canadian mentorship platform gets investment boost from U.S Equity Firm
Private equity firms have been selling out of recently-listed stocks in Europe, swallowing steep discounts in volatile markets to allow them to recycle investor capital.
Hellman & Friedman and other backers of Allfunds Group Plc this week offloaded about €288 million (US$295 million) of stock in the mutual fund distributor at a 37 per cent discount to last year's initial public offering price. About a week earlier, Nordic Capital sold half its stake in Cint Group AB at 19 per cent lower than the Swedish software company's value at IPO.
An even starker example came in October, when Chinese private equity firm Wise Road Capital sold shares in Alphawave IP Group Plc at a 76 per cent discount to the semiconductor firm's London IPO price.
Sales of large blocks of shares are profit-taking events for a company's early backers, making spates of transactions at such large discounts relatively rare. The recent round is reflective of the pressures facing some private equity firms in a market with rising inflation and higher interest rates.
Buyout firms are having a tough time trying to exit their portfolio companies, as volatility spooks buyers and keeps the IPO markets shut. But they still need to find a way of returning money to their investors -- or limited partners -- if they want to convince them to back new funds. That's leading them to sell some of their most liquid holdings in the stock market.
“PE firms have to deploy capital and distribute proceeds to their LPs,” Anu Sharma, head of investment banking in Europe, the Middle East and Africa at William Blair & Co., said in an interview. “In this environment, they are prioritizing businesses with good underlying fundamentals, such as high margins and growing cash flows.”
To be sure, it's not just buyout firms that have been selling blocks of shares at discounts. European lender BNP Paribas SA also participated in the Allfunds placement, while smaller banking peer Intesa Sanpaolo SpA recently sold shares in Nexi SpA at a tighter three per cent discount to the payment firm's listing price.