Investors Buy The Dip, Private Equity Sells the Rip

The writing is on the wall if anyone cares to read it. But the party is so much fun, let's just stay a little longer.
Private-equity firms KKR & Co. and Bain Capital Partners are prepping initial public offerings for three of its larger holdings—retailer Toys "R" Us Inc., hospital chain HCA Inc. and semiconductor business NXP Semiconductors, according to people familiar with the deals. If the stock market continues its ascent, or at least remains stable, those IPOs are expected to price in the coming months, these people said.
KKR and Bain, two of the most aggressive private-equity firms during the buyout boom, are now as aggressively looking to cash out. They are leading what is expected to be a season of IPOs as long as the markets continue to stabilize or climb. The IPOs would allow the firms to partially cash out their stakes and return money to investors. They also could use the proceeds to pay down the sizable debt used to finance the takeovers.


Anonymous said...

Back in July of 2005, someone on a web forum about housing prices pointed out that "the more the supply, the higher the prices, because high supply brings out more buyers since there is more selection". What is your opinion of this logic?

Tsachy Mishal said...

The simplest explanation is usually the best.

PD said...

all the PE guys i know are busy doing deals. they are looking to make investments. I wouldn't necessary consider a PE IPO a sign of the top. It just means they can liquidate.

If there is one thing these guys learned from 2008 was PE values took big BV hits, because of a lack of liq and it drastically increases their risk.

Now the market recovers, they can liq assets that they have managed into profits and purchase other poorly capitalized or poorly managed companies.

mkt move in cycles, we just went through a recession and the mkt is pricing in an early recover. Don't forget that.

simply put they have priced in a recovery.

Tsachy Mishal said...

Private Equity fund raising has been very weak and we have not seen much in the way of new deals of US public companies.