PE firms ride liquidity wave to exit holdings

MUMBAI: Private equity (PE) investors have resorted to open market transactions to exit their positions in publicly traded companies, riding the surge in liquidity, as the coronavirus pandemic has stymied private market deal activity. Between January and August, such open market sales added up to $1.5 billion, accounting for half of all PE exits in both value and volume, an EY analysis of VCCEdge data showed. Overall, PE exits fell 40% to $3 billion against year-ago period.

Last week, Blackstone sold a 23% stake in Essel Propack Ltd through a block deal worth $252 million (₹1,861.50 crore). Earlier in September, another PE firm— ADV Partners—sold a 10.5% stake in Amber Enterprises for ₹604 crore, in a block deal.

In the past few months, many other PE firms such as Carlyle, Warburg, Partners Group and Westbridge Capital have sold a substantial amount of shares through the open market to book part or full exits.

“Most of these companies are trading at a premium to their pre-covid levels. And in this environment of excess liquidity, there is a good appetite from institutional investors for highquality stocks,” said Jibi Jacob, head of equity capital markets at Edelweiss Investment Banking.

According to Vivek Soni, partner and national leader, private equity services, EY, the pandemic has led to a change in the mix of exit routes. “Unlike last year, there are hardly any meaningful exits by way of secondary (PE to PE) deals or strategic deals. Most of the exit value has been accounted for by IPO (precovid) or open market exits.”