Jefferies

Actionable Ideas for Companies and Sponsors

Partial Stake Sales by Private Equity On The Increase

In 2017, 24 percent of exits by private equity firms were thru partial stake sales, as financial sponsors sought to reduce risk at this stage of the economic cycle, while preserving further upside. In addition, partial sales provide a valuation peg for private equity fund raising, capital to return to limited partners, and potentially better refinancing terms. Investors in these partial sales have expanded from traditional participants, such as pension funds and sovereign wealth funds, to the broader financial sponsor universe. The benefit for the acquiror is participation in an attractive company earlier in its growth cycle, risk-sharing with the original investor and potentially more favorable debt financing.

In 2017, Jefferies was actively involved in several partial stake sales, including (i) advising EQT in October 2017, in the sale of a 19% stake in Anticimex AB to a consortium of Swedish private equity firms and a pension fund; (ii) advising Ares in July 2017, in the sale of a minority stake in National Veterinary Associates to Canadian pension fund, OMERS; and (iii) advising Apax Partners in its sale of a 45% stake in Garda World to Rhone Capital, who now owns majority control.