With the higher cost of financing deals making traditional investment exit routes more difficult and the UK IPO market in a slump, UK private equity managers are increasingly turning to continuation funds as they look to offload assets.
That’s according to a poll of 200 senior UK-based mid-market focused industry professionals carried out by Numis as revealing that selling portfolio companies to themselves is the most popular option for private equity executives seeking an exit from their investments.
The sale of assets to their own newer funds, which allows PE firms to return cash to investors, has overtaken private auctions as the preferred route to exit investments, with private auctions now the least favoured of the four options in the poll, according to Numis.
Despite the vast majority of those polled indicating that they did not expect the IPO market to fully recover until Q4 next year, stock market listings ranked as the third most popular choice, with a ‘duel track’ approach, whereby firms keep their options open by preparing for both an IPO and a private sale, ranking second.
