Exits in private equity to gain momentum in 2013

The year 2013 is expected to see several private equity (PE) firms exiting their mature investments, through options ranging from public offerings in stock markets, secondary deals with other PE firms, to strategic sales.

PE investments that have matured over five years will be eager to exit in the new year. “Next year will be busy for many PE firms in terms of exits because the investments made in 2007-08 were huge,” says Sanjeev Krishnan, executive director at PricewaterhouseCoopers India. “PE firms would be more optimistic on secondary deals (PE-to-PE), as we have seen in the past.”

Agrees Mayank Rastogi, partner, private equity and transaction advisory services at Ernst & Young. “The current environment, characterised by slowdown in growth, exit pressure and funds nearing their terms should provide attractive investment opportunities emerging in the secondary deal market,” he says, adding, “This year did see a 50% growth in the PE-to-PE deal space and we should see this market evolving further in 2013,” he adds. For instance, PE firms General Atlantic and Oak Hill Capital Partners exited investment in BPO firm Genpact at an exit value of $1 billion to Bain Capital.

PE firms exited across 137 deals for a value of $4.3 billion in 2012 with open market sale topping the favoured route for exit, followed by M&A and secondary sales, based on data provided by M&A and PE deal tracking firm VCCedge.

There would be action in strategic buyouts too,

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