'Green shoots' for listed private equity as exit activity shows rebound signs
A significant uptick in exits would provide private equity investment trusts more freedom to decide how to allocate their capital | Credit: iStock
According to the Jefferies report Listed Private Equity — Exit Activity Green Shoot, there are various "'green shoots'" that could signal a recovery in private equity exit activity.
Analysts Matthew Hose and Fiona Huang noted the exit value of US private equity deals has increased quarter-on-quarter for the first time in twelve months, while HarbourVest Global Private Equity (HVPE) and Pantheon International (PIN) have disclosed growth in their Q2 distributions.
There were also signs of IPO activity, with press reports pointing to potential exit activity of some of the underlying holdings of listed private equity trusts. One example is the Spanish firm Idealista — owned by Oakley Capital Investments and Apax Global Alpha.
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To determine when these new offerings would materialise into exits, the analysts pointed to a study published by Neuberger Berman in December 2022, which analysed distribution patterns following the bursting of the dotcom bubble and during the great financial crisis.
It found that although distributions in both periods fell off immediately, the ensuing recovery in exits lagged the recovery in public equities markets before staging a complete comeback.
If Q3 2022 was the equity market bottom, historical trends would indicate that exit activity will increase over the next few quarters, the analysts noted, with the only impediment to this being the current stand-off between buyers and sellers over valuations.
«Despite this, we believe any further (and broader) recovery
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