Private Equity, Public Exits Q1 2017

Global IPO activity got off to a brisk start in the first quarter of 2017. 1Q saw a 92% increase by volume versus last year, and the most active first quarter since 2007.

PE-backed IPO activity accelerated at an even faster rate. 1Q saw more than four times the amount raised in 1Q 2016. The increase in IPOs underpinned an overall increase of 15% in PE exits over the same period a year ago.

PE-backed activity was particularly robust in Oil and Gas and Life Sciences. The outlook for the balance of the year is strong – there are currently more than 70 PE-backed companies in registration that could raise more than US$11b in aggregate proceeds.

Key things to watch in 2017

  • Economic fundamentals are improving in the major developed economies, and volatility is low.
  • Pent-up demand for public offerings suggests global IPOs will continue to rise in 2017.
  • The Asia-Pacific region may see a temporary drop in activity, but is expected to rebound.
  • Investor and business sentiment in EMEA is rising throughout the region.
  • The strong first quarter of 2017 for US IPOs established a solid runway for more deals.

EY - Total PE-backed IPO value during the quarter

PE-backed IPOs increased more than 300% from 1Q 2016

1Q 2017 saw 26 PE-backed companies raise US$8.6b, a more than 300% increase from 1Q 2016. Blackstone’s Invitation Homes IPO was one of only two IPOs over a billion dollars, second only to Snap, and accounted for 21% of total.

 

Exits increased with routes reverting to the mean

PE exits increased in 1Q to US$75.9b, up 15% from last year. The fourfold uptick in IPOs and doubling of sales to secondary buyers offset a 12% decline in sales to strategics, effectively driving a reversion to the mean for PE exit routes.

EY - Exits increased with routes reverting to the mean

 

EY - Percentage of total IPO market that PE represents

Percentage of total IPO market that PE represents

While PE-backed deals have declined as a percentage of the overall IPO market from their highs in 2014, PE nonetheless represents a critical pillar of the IPO market, accounting for more than a quarter of IPO proceeds in the first three months of the year.

 

2017 sees increase with strong gains across the Americas and Asia-Pac

After a sluggish IPO market across all major regions in 2016, stable markets and increased clarity led to dramatic increases in value in the Americas and Asia-Pac, while lingering Brexit concerns led to a value decline in EMEA

EY - 2017 sees increase with strong gains across the Americas and Asia-Pac

PE IPOs focused on Oil and Gas and Life Sciences

PE-backed activity was particularly robust in the Oil and Gas and Life Sciences spaces, with comparative weakness in Consumer Products and Chemicals relative to the broader IPO market.

EY - PE-backed IPO volume overweight/underweight relative to global IPO volume

 

Pipeline strong for 2017

72

companies could raise more than US$11b in proceeds

The outlook for the balance of the year is strong. There are currently more than 70 PE-backed companies in registration that, in the aggregate, could raise more than US$11b in total proceeds.

Nearly ½ the pipeline consists of Computers and Electronics, Transportation, Health care, Retail and Finance companies.