Private equity firms were not as lucky as venture capital firms in terms of reaping gains through public market exits during the current calendar year. Unlike the VC firms who netted $4.06 billion till November, which was double their last year’s earnings, the gains for PE firms was flat at $13.3 billion, according to data shared by Venture Intelligence. This was also thanks to Blackstone’s $808 million exit from Mphasis, else their earnings would have been lower compared to the same period last year.
Also ReadCementing key position: Adani-owned Ambuja Cements announces merger of Sanghi Industries, Penna Cement with itself
However, over the last five years, the number of exit deals by PEs in the public markets have risen consistently, encouraged by a robust appetite among public market investors. Total number of exit deals by PEs, either through IPOs or open market transactions or reverse mergers, were 161 last year, compared to 87 deals in 2022 that fetched around $8.2 billion and 106 deals in 2021. This year PEs executed 165 exit deals.
In June, Blackstone sold a 15% stake in the IT services firm Mphasis, cutting its stake to 40% from 55% as of March. Blackstone remains the largest shareholder in Mphasis. Besides this deal, investors such as Peak XV, Norwest and TPG Capital sold around 11% stake in non-banking financial company Five Star Business through block deals worth $536 million in September, while Warburg Pincus sold its entire 9.17% stake in Kalyan Jewellers India for $451 million.
Also Read Shriram Finance completes sale of housing finance arm Shapoorji Pallonji sells land in Mumbai for Rs 455 crore Blackstone may list mega REIT in 2025 UK’s Vodafone to sell remaining 3% stake in Indus Towers as strategic shift continues
“The primary driver (of exit deals) has been a meaningful difference in valuation between public and private mutliples, where the difference can range between 20-50%” said Avnish Mehra, senior MD and co-head, private equity, Everstone Capital. Better valuations by public market investors this year have also driven at least 13 startups to list on the bourses.
Much like last year, nearly 90% of the exits for private equity firms came from open market transactions this year via bulk or block deals, the data showed, while the proportion of sale through IPO climbed up marginally to 16% from 11% last year.
» Read More
