Private equity is finally getting ready to cash in (kkr)
n July, three companies that were targets of some of the largest ever leveraged buyouts — Univision, the Spanish-language broadcaster; technology company First Data; and supermarket Albertsons — filed to go public.
The companies are also notable because they’ve been owned by private-equity funds for much longer than anticipated — as much as a decade in Albertsons’ case.
An IPO filing is still a long way away from a clean exit: Even with a public listing it can take years for private-equity investors to sell down their shares and be done with an investment.
In the wake of the financial crisis, so-called “hold times” at private-equity firms increased to an average of five to nine years for a North American company compared to an average time of 4.2 years before markets crashed, data from Preqin shows.
Hold times are the duration a private-equity-backed company sits in its owner’s portfolio. Hold times have also irked some private-equity investors like state pensions after revelations of fee abuse at some of the industry’s top firms.
For private-equity firms, that’s meant having to run businesses for much longer than they planned. In some cases, they’ve used the time to sell off pieces to manage a smaller business as they push toward an IPO.
In other cases, big private-equity firms like TPG Capital and KKR found themselves facing problems they couldn’t strategize past. Deals like Harrah’s Entertainment and Energy Future Holdings went belly-up, costing sponsors billions in the process and making it harder for them to raise new funds in the aftermath.