IPOs 2013 highlight for Australia PE

PE-backed IPOs reached a five-year high, with more coming as the year ends.

Exit activity in Australia remained steady during 2013, with 64 companies sold by private equity firms in the country to 3 December 2013, compared to 68 last year, according to data from the Australian Private Equity and Venture Capital Association (AVCAL) and consulting firm Ernst & Young.

The total exit value for the year rose to A$4 billion (€2.7 billion; $3.6 billion) compared to A$2.5 billion in 2012, a 60 percent increase. 

However, the 2013 exit value includes the reportedly $1.8 billion write-off by CVC Capital Partners of Nine Entertainment, which happened in late 2012. Excluding this figure would put exits at roughly the same value as the full year 2012.

Trade sales accounted for the largest number of exits by private equity this year (41 percent). But private equity backed-IPOs rose to their highest levels in five years, AVCAL data showed.

During 2013, A$866 million worth of private equity investments were exited via IPOs, with Quadrant Private Equity’s A$500 million listing of Virtus Health in June igniting positive sentiment for other GPs seeking an IPO exit.

Nine Entertainment’s owners Apollo Global Management and Oaktree Capital Management have since then revealed plans for Nine's public offering, which is expected to price this week and could raise up to A$670 million Private Equity International reported earlier.

Similarly, Anchorage Capital Partners released the prospectus in November for the listing of electronics retailer Dick Smith. The total IPO is expected to raise A$344.5 million, with shares priced at $2.20 per share, according to the firm.

Despite an uptick in exit activity, fundraising for the country fell dramatically to just $711 million in 2013, a 77 percent decline from the $3.03 billion raised during 2012.

Anchorage Capital Partners, Anacacia Capital and Advent Private Capital raised the largest vehicles for Australia-based funds in 2013, accounting for 80 percent of the total.

However, the decline in fundraising for the country can be in part attributed to the large funds raised for the country in preceding years.

“Competition for new commitments has remained intense on the back of the last three years, which saw two of the three largest ever Australian PE funds being raised (the A$1.5 billion Archer Capital Fund 5 in FY2012 and the A$1.48 billion CHAMP III fund in FY2011), as well as several large regional funds raising money over the same period” the report said.

Domestic investors made up 58 percent of all commitments to Australian funds – the highest proportion seen in the last three years despite widespread concern over domestic LPs stepping back from country managers due to overseas diversification, as well as conflict over fees.

North American investors committed less in 2013 compared to previous years, but still made up 18 percent of all commitments. European investors accounted for 7 percent, a similar proportion to prior years. Asian LPs made up 13 percent.