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More private equity firms buying public companies

By Hugh Wilson

The number of ‘public to private’ deals grew 40 per cent in 2019

More firms are leaving the stock market and returning to private ownership, according to new figures from the UK.

Analysis by law firm Pinsent Masons revealed a 40 per cent rise in the number of businesses listed in London becoming private in 2019. The value of such deals more than doubled year-on-year, to £21.1bn ($27.7bn, €24.7bn).

In all, 28 companies listed in London were taken off the stock exchange by private equity firms. That compares to 20 “public to private” deals in 2018.

The most notable public to private deal in 2019 was the £4bn acquisition of defence firm Cobham by US private equity group Advent International.

“The speed at which companies are going private principally boils down to depressed share prices, low interest rates and the massive firepower of private equity,” said Julian Stanier, partner at Pinsent Masons.

“Attractive valuations have enabled PE funds to acquire companies with strong fundamentals at prices below recent norms.”

Pinsent Masons said it anticipates this wave of public to private activity to continue into 2020.

The activity will accelerate a decline in the proportion of publicly listed companies, in London and around the world. Data from Dealogic showed that 34 companies applied to be listed in the UK in 2019, the lowest number in a decade.

It’s thought that managers are turning to private equity because they think public markets undervalue their companies.

FURTHER READING: Private wealth is main capital fuel for start-ups

FURTHER READING: London’s fintech sector attracts record levels of US investment in 2019

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