Ernst & Young: Private Equity in Europe Is Beating Public Equity In Europe
From ValueWalk:
Gross investment returns from private equity-based companies outperformed comparable publicly listed companies in Europe by a multiple of over three times, notes a recent EY study.
In its report titled: “A study of 2013 European exits” EY points out that PE has continued to deliver returns to its limited partners.
Rebound in private equity-backed IPOs
According to the EY report, the big story for 2013 was the return of exits via IPO. Private equity-backed IPOs
rebounded to a level not witnessed since 2006, with 13 companies in
EY’s sample listing, compared to just 3 in 2012 and 5 in 2011.
Taking a closer look at the exit activity in 2013, the EY report
points out that the rate of creditor exits slowed in 2013, and fell to
the lowest level since before the crisis. The report notes this
encouraging trend suggests that the worst may be behind private equity
in Europe.
As can be deduced from the above graph, the third main exit route viz.: trade declined in 2013. Interestingly, despite enhanced confidence among corporates, just 16 were sales to trade, compared with 25 in 2012.
Outperformance by private equity-based companies
Using a long-term lens to track the development of private equity
industry in Europe, the EY report notes in the early 2000’s PE really
started to heat up, with 2007 turning out be the peak year for the value
of deals. This led many to believe that PE would cause a seismic shift
in the modern capital landscape. However, in 2008, PE was hit hard by
the effects of the financial crisis, the instability of the euro and overall global economic malaise....
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