The value of private equity (PE) exits in 2014 surged by 67 per cent year on year with buyout-backed exits hitting records, globally.The trend was fuelled mainly by the sales of a handful of very large assets to strategic acquirers and an aggressive IPO market in the first half of the year, said a report from Bain & Company.
According to the Global Private Equity Report 2015, the IPO exit channel gave a strong performance in Europe; the numbers of buyout-backed IPOs almost doubled in both count and value, making it a record of sorts. In the same period, PE-backed IPO value in Asia Pacific skyrocketed to $63 billion.
Global buyout investment activity barely budged in 2014, declining by 2 per cent in value from 2013.
According to the Bain report, abundant capital from PE funds and global investors, plentiful and cheap debt have both made 2014 a great time for exits. Still, buyers faced intense competition and inflated asset prices due to strong public market valuations.
“Last year was undoubtedly the year of the exits, which raised the caution flag for many buyers,” said Suvir Varma, head of Bain’s Asia Pacific Private Equity Practice. “The surge in global liquidity and near zero-interest rates has inflated asset valuations and boosted acquisition multiples on private PE targets, which will make it more challenging to earn the same high levels of return going forward.”
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