{"id":2305,"date":"2023-10-17T08:52:08","date_gmt":"2023-10-17T08:52:08","guid":{"rendered":"https:\/\/infundpros.com\/business\/eqt-testing-private-stock-sales-as-ipo-markets-dysfunctional\/"},"modified":"2023-10-17T08:52:08","modified_gmt":"2023-10-17T08:52:08","slug":"eqt-testing-private-stock-sales-as-ipo-markets-dysfunctional","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=2305","title":{"rendered":"EQT testing private stock sales as IPO markets \u2018dysfunctional\u2019"},"content":{"rendered":"<div>\n<p>Stay informed with free updates<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Simply sign up to the <!-- -->Private equity<!-- --> myFT Digest &#8212; delivered directly to your inbox.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=8a354b8c-ccb9-44e6-82f6-1499b3f9681e&amp;concept-id=ab70c42c-4d60-4851-89bb-16e2daeddfc1\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Nordic private equity fund manager EQT Group is drawing up plans to hold private stock sales for its portfolio companies because public markets have proven unreliable to exit investments.<\/p>\n<p>EQT chief executive Christian Sinding said private auctions among its 1,100 limited partners could provide a novel way for its backers to monetise their illiquid holdings without the need to sell shares in initial public offerings.<\/p>\n<p>The preliminary plans have been driven by what Sinding described as \u201cdysfunction\u201d in the IPO markets, he told the Financial Times.<\/p>\n<p>The comments come as the volumes of new offerings in Europe have slumped to their lowest level since the 2008 financial crisis and private equity firms have a harder time selling down their stakes in portfolio companies.<\/p>\n<p>A slowdown in dealmaking and lack of IPO prospects have prompted fund managers to embrace more creative financial engineering techniques to return capital to their LPs.<\/p>\n<p>In EQT\u2019s plans, the firm would hire an investment bank to build a book of interested buyers and sellers of a single private investment, much like the process of hiring underwriters for a traditional IPO. <\/p>\n<p>The underwriter would lead negotiations on pricing, but instead of soliciting investment from public market investors like hedge funds, mutual funds and other large institutional investors, they would focus on EQT\u2019s existing investors. The private transaction would give investors in the private company the ability to sell shares, or simply hold them. Others would get the chance to buy.<\/p>\n<p>\u201cAs long as the price is set in a fair way at a fair market value, it doesn\u2019t really matter that the transaction is private,\u201d said Sinding. \u201cWhy go public if we actually don\u2019t need to?\u201d<\/p>\n<p>Sinding acknowledged that the idea was untested and could change with investor feedback. For instance, in IPOs, investors often don\u2019t wind up receiving full allocations, something that might anger some investors, while others would like to sell more stock than they can.<\/p>\n<p>These deals would differ from so-called \u201ccontinuation funds,\u201d an increasingly common private equity tactic where firms solicit specialised secondaries funds to buy an individual portfolio company, or a group of companies, from a fund, said Sinding. <\/p>\n<p>In these deals, exiting investors sell their investment to the secondaries buyers, who commit to a new \u201ccontinuation\u201d fund alongside the investors who choose to roll their investment into that new fund. Private IPOs may be more cost efficient, said Sinding, because secondaries funds often come with layers of fees.<\/p>\n<p>\u201cThis is not really happening yet, but it\u2019s kind of the next generation of continuation of vehicles,\u201d he said.<\/p>\n<p>EQT, which manages \u20ac224bn in assets, has been frustrated with IPO drawbacks including their access to a limited pool of potential buyers, mostly hedge funds, which may own shares for a short period of time. <\/p>\n<p>Exchange traded funds often are not in a position to buy companies until they are included in main stock indices. Active investment managers, meanwhile, have struggled to maintain their assets, cutting into availability of capital for newly listed companies. <\/p>\n<p>\u201cThere\u2019s dysfunction in the IPO market\u2009.\u2009.\u2009.\u2009The barriers are actually quite high,\u201d said Sinding.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/8a354b8c-ccb9-44e6-82f6-1499b3f9681e\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Stay informed with free updates Simply sign up to the Private equity myFT Digest &#8212; delivered directly to your inbox. Nordic private&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-2305","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>EQT testing private stock sales as IPO markets \u2018dysfunctional\u2019 | inFundPros<\/title>\n<meta name=\"description\" content=\"Stay informed with free updatesSimply sign up to the Private equity myFT Digest -- delivered directly to your inbox.Nordic private equity fund manager EQT\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=2305\" \/>\n<meta property=\"og:locale\" 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