Exits are in the news again – revving up for a record-breaking racing season, with the £2.35 billion (US$3.5 billion) listing of online car marketplace Auto Trader Group, an investee of Apax Partners (Apex), which has now delivered Great Britain’s biggest ever private equity-backed listing. The post-IPO bounce saw a 16%+ rise in Auto Trader Group, and secured Apax over £926 million after selling 59% of the business, leaving the firm still with a 25% stake.
Apax looks all the better for having rebuffed a £2 billion takeover approach from rival private equity (PE) firm Hellman & Friedman (Hellman) just a month ago – seen by some as simply a straightforward challenge to the listing. Apax could of course have secured substantial value at exit from Hellman’s offer as well, but the asset’s performance at IPO has confirmed the success of its strategy and left it able to reap further rewards from Auto Trader in future. Institutional appetite for the listing reportedly led to eight times oversubscription, suggesting that there will still be plenty of appetite for Apax’s residual stake. Apax, meanwhile, got its bounce by pricing astutely below the top of the range, and the shares continued to trade comfortably above their listing price after flotation.
Apax’s victory in the IPO market may be doubly hard to repeat because not every private equity flotation exercise of late has been equally decisive. The firm previously stepped back from the widely expected IPO of Travelex to sell the company to an Indian buyer instead,
Hellman’s near miss with its IPO challenge points to one of the other most fertile source of exits in the market at the moment – secondary buyouts. The Blackstone Group has put UK leisure asset Center Parcs up for grabs, with an estimated valuation for the entire business of £2.5 billion, reportedly garnering interest from a consortium of CVC Capital Partners and Singapore’s GIC. KKR stopped another UK IPO in January when it bought thetrainline.com from Exponent Private Equity for an undisclosed sum, just two weeks after the target announced listing plans that would have led to a flotation roughly a quarter of the size. Preqin assesses the total value of exits in 2014 at $428 billion, the highest figure since 2006.
However, that timing also points to the cyclical character of this exit boom. Major private equity firms are using favourable exit valuations to offload many of their investments made in the high old times just before the GFC – which luckily in many cases are pushing up against the end of their preferred holding periods. Talk about saved by the (listing) bell.
