Private equity houses have ranked publicly listed companies in the consumer industries sector as being the most conducive to private equity backed public-to-private deals over the next
Private equity houses have ranked publicly listed companies in the consumer industries sector as being the most conducive to private equity backed public-to-private deals over the next five years, according to a survey from accountants and business advisers BDO Stoy Hayward.
Alex White (pictured), corporate finance partner at BDO Stoy Hayward, says: ‘The City always used to be suspicious and somewhat sniffy about public-to-private deals but now fund managers want cash and are keen to receive takeover proposals.
‘Quoted companies are being starved of equity finance and so cannot fund takeover bids. That means private equity is the only game in town. This is good news for the 48 per cent of management teams who, if they had their time again, would not choose to float their company.’
The firm’s ‘Public-to-Private’ survey reveals that when asked to consider which sectors will be the most conducive to public-to-private deals over the next five years, 82 per cent of private equity houses agreed this to be true of quoted companies in the consumer industries (including personal goods, food and beverage and household items) sector.
This was followed jointly by financial services and retail and leisure, both being perceived as conducive by 76 per cent of private equity houses. This comes as 94 per cent of private equity houses are likely to consider public-to-private deals over the next two years, according to the survey.
Institutional fund managers ranked media and internet quoted companies as the most conducive to public-to private deals over the next five years. This was followed by companies in the IT and retail and leisure sector, with 58 per cent of institutional fund managers perceiving them as favourable for public-to-private activities.
According to the survey, private equity houses and institutional fund managers thought the least conducive to public to private deals were publicly listed companies in aerospace and defence (private equity houses 41 per cent and institutional fund managers 32 per cent), energy and mining (private equity houses 35 per cent and institutional fund managers 26 per cent) and autos (private equity houses 18 per cent and institutional fund managers 36 per cent).
The survey also revealed that 52 per cent of institutional fund managers believe institutional shareholders would welcome a public to private transaction proposal while only two per cent said they were unreceptive to public-to-private deals and two per cent said they would be hostile towards this.
The survey shows that nearly half the institutional fund managers that responded (48 per cent) will ormay encourage investee companies to seek public-to-private funding within the next two years.
