Private equity sale activity was always expected to ramp up in the second half of the year, but now it’s suggested that there’s in fact a deluge of businesses hitting the market that are owned by sponsors.
One industry insider commented of 15 businesses owned by buyout funds they know of being on the market alone.
DataRoom knows of Permira’s radiology business I-Med, which has been taking meetings with possible buyers but has been deliberating over whether to actually fire the starting gun on a process, because it may not achieve its hoped-for price.
Then there’s Quadrant’s Amart Furniture that has been on its books for a long time and would soon surely need to involve the Sydney-based owner biting the bullet and just taking what it can get for the business to get it off their books.
Adamantem has been selling its laundry business Linen Services Australia.
A sale process for Loscam is up and running, although it’s not officially part of this category because owner China Merchants is not a private equity firm.
Quadrant is also understood to be bringing Darrell Lea owner RiteBite Group to market through UBS, while BGH Capital is believed to be soon selling CyberCX through Goldman Sachs.
Then there’s the childcare businesses that were on the market last year – Quadrant’s Affinity Education and Partners Group’s Guardian Early Learning.
A sale of Device Technologies by Navis Capital could soon be on the cards, although most think this will be next year, as could be the case with Allegro Funds’ Perth Radiological.
Silver Lake may try its luck again at selling Ticketek owner TEG Group after Blackstone passed on the buying opportunity in the past year.
Crescent Capital still needs an exit out of wealth manager ClearView, although this may be through a block trade on the market, while Journey Beyond’s cash strapped owner may once again put the business up for sale.
Others that have been shopped around the market are PAG’s Craveable Brands, Potentia’s Education Horizon’s Group and Advent’s Compass Education, along with Navis Capital’s Mainland Poultry.
BGH has also been toying with a possible sale of its primary health business ForHealth while Quadrant’s Fitness and Lifestyle Group and Rockpool Dining operation are still for sale.
That’s more than 19 companies right there, and the future’s still unclear about some of the turnaround situations in private equity hands.
The debt of KKR’s accounting software company MYOB is now at junk bond status while Brookfield’s Healthscope is in the hands of restructuring experts.
With private equity firms unable to attract values for their businesses close to what they paid in the cheap debt environment a few years ago, perhaps the answer could be that they become initial public offering prospects.
However, the market is currently largely closed for IPOs, and not helping matters is that a lot of active fund managers are leaving the industry, with passive funds not being participants because the floated businesses do not enter the index straight away.
The other option for sponsors is holding companies for longer and fortunately for them, major lenders are being very understanding in the current market when it comes to extending debt repayment deadlines.
Or they sell at discounts in the new market reality or swap assets among themselves.
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