Actionable Ideas for Companies and Sponsors
Increasing Trend of Concurrent Share Repurchases with Secondary Equity Offerings
In 2017, 24 secondary block trades or follow-on offerings were executed with concurrent share repurchases totaling $10.4 billion. A concurrent share repurchase is mutually beneficial for both the selling shareholder and the company. The company’s repurchase serves as an anchor order in the sell down and is immediately accretive to EPS, resulting in improved file-to-offer pricing. 2017 secondary share offerings with concurrent repurchases priced, on average, over 160 basis points tighter than secondary transactions without a concurrent repurchase. Typically the size of the share repurchase is approximately 25% of the secondary block or follow-on offering. Jefferies recently led a $145 million marketed follow-on for MedPace Holdings Inc., in which the company concurrently repurchased $63 million from the selling shareholder.