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European Private Equity’s exit boom is cooling off as deals are put on hold

Last week, British roofing company Marley and fitness chain Pure Gym became the youngest PE-funded company to put IPO plans on hold, suggesting the recent IPO in Europe is cooling off.

Marley, which was acquired by Inflexion Private Equity in 2019, originally planned to go public in September, valued at £ 500million. But on Tuesday it scratched its plans, pointing to market volatility. Two days later, Pure Gym, owned by Leonard Green & Partners, is scheduled to go public for $ 1.5 billion.

Companies in mainland Europe have also struggled in recent days. Dutch e-commerce company Cool Blue, backed by Dutch company Hal Investments, postponed its IPO on Wednesday. But European PE-backed listings were canceled in early June when Parts Holding Europe, a French auto parts dealer backed by Bain Capital, abandoned its listing plans for the second time.

In the meantime, some offers that came onto the market have underperformed. Earlier this month, Eurowag, a Czech trucking services company backed by TA Associates, saw its shares fall 10% on its first day of trading.

For much of the year, PE exit activity – including its stock market listings – was on the way. According to the Q3 PitchBook European PE Breakdown, PE companies closed 425 exits worth a total of 126.4 billion in the third quarter.

However, public listings accounted for 21% of the third quarter exit value, compared to nearly 40% in the first quarter.

Despite this shift, PitchBook senior analyst Dominick Mondesir said liquidity in the system remains high.

“PE exits tend to be very opportunistic,” said Mondesir. “Investors will take a wait-and-see approach as the economy enters a new phase of pandemic recovery as various fiscal stimuli weaken.”

Read more about this in the Q3 PitchBook European PE Breakdown.

Featured image by Chris J. Ratcliffe / Getty Images

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