Listed private equity ('LPE') managers' expect to be exceptionally busy over the next six months, with levels of both new investments and realisations expected to be maintained or increase by a majority of respondents to a recent survey conducted by LPEQ, the association of listed private equity companies.
of respondents expect the historically high rate of realisations over the past six months to continue or even increase
Almost three-quarters of respondents expect the historically high rate of realisations over the past six months to continue (47%) or even increase (24%).
However, the nature of the exits may shift: in contrast to H1, 47% of managers believe realisations will be driven mainly by sales to other private equity companies through ‘secondary buyouts’, with 41% expecting corporations to be the main purchasers of private equity backed companies. The vast majority of respondents think investment activity will rise over the next six months; just 6% expect it to fall.
Despite this, however, 23% of respondents expect purchase price multiples to reduce, with 65% expecting pricing to remain steady. Leverage to support new investments is expected to remain strong or increase by a large majority of respondents. Promisingly, all respondents expect earnings to increase for portfolio companies across developed markets, including Europe and the US.
Andrea Lowe, CEO of LPEQ, said, “At a time of global economic uncertainty and market jitters, private equity managers remain active, largely bullish and willing to commit more capital to privately held companies. The fact that just 6% of respondents expect to invest less over the next six months than the previous half-year, is testament to private equity’s long-term outlook and ability to seek opportunities in an uncertain environment."
LPEQ MANAGER INSIGHTS SURVEY – H2 2015
We would expect to see listed private equity NAVs remain relatively robust compared to movements in quoted markets, particularly given the relatively low direct exposure to emerging markets. This should be positive for sentiment for the sector. Tim Spence, Senior Partner and Finance Director Graphite CapitalTim Spence, Senior Partner and Finance Director at ICG Enterprise Trust
This survey was conducted in late August-September 2015 among the following LPEQ Members: J.P. Morgan Private Equity Limited JZ Capital Partners Limited NB Private Equity Partners Limited Oakley Capital Investments Limited Pantheon International Participations PLC Princess Private Equity Holding AG Spice Private Equity Limited Standard Life European Private Equity Trust PLC Altamir SCA Deutsche Beteiligungs AG Dinamia Capital Privado SCR, SA. Dunedin Enterprise Investment Trust PLC Electra Private Equity PLC F&C Private Equity Trust plc Graphite Enterprise Trust PLC HarbourVest Global Private Equity Limited HgCapital Trust plc