Blackstone fields approaches from listed groups keen to be bought

Blackstone’s purchase of Crown Resorts for around $8bn in 2022 is among the big Australian deals for the buyout group. Picture: William West/AFP

Private equity firms typically have a reputation for aggressively targeting listed companies in a pursuit to gain control.

But now it seems that the shoe is on the other foot.

It’s a trend flagged by one of the firms behind some of the biggest buyouts in Australia.

Blackstone’s head of Australia and New Zealand, Michael Blickstead, says the private equity firm is increasingly being approached by boards and chiefs of listed companies offering their businesses for sale.

“They are willing to engage with us in a more constructive manner to see if there is something that works for us from a returns perspective.”

On the sidelines of the AVCJ Private Equity Forum in Sydney on Wednesday, Mr Blickstead, a senior managing director at Blackstone, said the trend had been noticed in the past six months, where they were taking the view it was time to take the company private.

Blackstone’s Michael Blickstead.

It comes after a large number of groups that rushed to the boards during the global pandemic when money was cheap are struggling to trade above their initial public offering price.

A standout example was APM, floated by Madison Dearborn in 2021 for $3.25bn, only for Madison Dearborn to return to the market to buy it back again for $1.6bn after APM’s share price languished to $1.25 and its market value at $1.14bn.

Blackstone, with $US1.1tn of assets under management, entered Australia in 2009 as a private equity player and since that time has invested about $30bn, most of which was in the past five years.

Mr Blickstead, who joined the New York-based firm in 2022, was part of the team responsible for one of Blackstone’s largest ever buyouts in Australia last year - the $24bn purchase of data centre operator AirTrunk with its pension fund backers from shareholders including Macquarie Group.

Airtrunk founder and CEO Robin Khuda with Macquarie Group boss Shemara Wikramanayake. Picture: Supplied

The same year he joined, Blackstone purchased the James Packer-backed casino operator Crown Resorts for $8.9bn.

Mr Blickstead said groups like Blackstone could maximise shareholder value through medium to long-term initiatives that they may not be able to do in the public markets.

This was at a time that market volatility meant value was not being reflected in their share prices.

“We may be able to deliver this value creation that they can’t do in the public markets.”

Blackstone only involved itself in friendly approaches, and there were groups that it had been building relationships with over a period of time that were more willing to engage with the firm in a constructive manner.

His comments come after the global boss of Goldman Sachs, David Solomon, said on Tuesday that financial sponsors, otherwise known as private equity firms, were “starting to unleash”.

Mr Blickstead said he believed there were a lot more people who were cautious about going out to market given the macroeconomic conditions and a number of deals last year falling over.

But now there were more groups launching sale processes.

“Equally, I still see a lot of bilateral engagement, given a lot of people are nervous about what we have seen over the last 18 months.”

And he believed this year, more private equity firms would be prepared to meet the market when it came to their price expectations.

“That took probably some time for people we are trying to buy from to adjust their expectations.

“I think they have, but equally, people have grown their earnings to get into their valuations.

“Their value hasn’t changed, but their (price) multiple has changed because they have grown their earnings.”

Mr Blickstead said he believed that the market was still relatively resilient from a consumer perspective.

“Some of the younger demographics with declines in discretionary spending, I think that is bottoming out.

“The good thing is lots of people have jobs because it is still record lows of unemployment.”