Expect more PE exits, says Grant Thornton

AN INCREASE in private equity exits in the next year is predicted in a survey by accountants Grant Thornton.

UK private equity firms are planning to exit a dramatically higher proportion of their portfolio investments this year than previously, according to the firm’s latest Private Equity Barometer report.

Grant Thornton said the report demonstrates the most positive exit environment in years.

The quarterly survey of more than 100 private equity executives shows 57 per cent of respondents planning to exit more than a quarter of their portfolio companies in the next 12 months. Last year, only 7 per cent gave the same reply.

Mustafa Abdulhusein, partner in Grant Thornton’s Midlands corporate finance team, said: “We haven’t seen such a surge in planned exits in years – more than half of UK private equity firms expect to sell more than a quarter of their portfolio.

“They are encouraged by improving exit conditions, with strategic investors increasingly prepared to outbid private equity players. This was the case with Kiddicare, where we ran a highly competitive sales process and received around 20 initial offers from a mix of private equity and trade players with Morrisons tabling the best offer.

“The surge in planned exits is also driven by the need of many private equity firms to demonstrate their ability to successfully cash in on investments before they hit the fundraising trail.

“It is remarkable that most funds are planning to attract so many new investors. Almost 60 per cent of respondents expect more than a quarter of limited partners in their next fund to be new to their funds,” continued Abdulhusein.

Almost half the respondents (47 per cent) saw business support services including infrastructure and logistics as a key investment focus over the coming 12 months.

Consumer, retail and food shared the accolade of second most coveted sector with high technology including software and IT.