Private Equity and Venture Capital-Backed IPOs
Private equity (PE) and venture capital (VC)-backed IPOs fell in both value and volume, as well as losing share in the overall IPO market. The slide mirrors a slowing pace of exits in both PE and VC.
Overall activity fell by 46% in the first half of 2018 to just 130 deals while capital raised by PE and VC-backed companies also fell to USD 30.5 billion in H1 2018 from USD 35.3 billion in the same period in 2017.

That helped push the PE/VC IPO exit share of the overall IPO market down to 19% in terms of volume from 29% in H1 2017. Both the VC and PE share in total capital raising declined in H1 2018.

PE funds are holding assets for longer periods of time as managers spend more time making the operational improvements necessary to drive returns rather than relying on the leverage and financial engineering of years past. There is also more patient capital in the market with more longer-term investment vehicles coming to market. Established buyout funds and newcomers alike are raising funds with holding periods double those of traditional buyout funds or longer.

Likewise, buyout funds are once again setting fundraising records so there is ample available capital in the market seeking investment opportunities and acquiring assets that might otherwise have sought IPO opportunities. This has enabled some companies to remain privately-owned while still managing to raise sizeable amounts of capital that would once only have been possible from public markets. Last year saw eight of the ten largest private deals on record.

The VC story is a similar one of slowing exits. However, while the number of VC-backed exits declined, the dollar value increased with North America remaining on top, led by the software sector. This year, however, is shaping up to be a better year for exits with IPOs for prominent technology firms Dropbox and DocuSign.
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