Would CVC ever consider a London listing?
News broke this week that buyout giant CVC Capital Partners has revived its shelved listing plans and is lining up a blockbuster float on Amsterdam’s Euronext bourse.
While CVC has declined to publicly comment on the reports, City A.M. understands that it is indeed dusting off its plans for a float, but no formal decision or timelines have been made.
The Six Nations and PG Tips owner, fresh off the back of a record-breaking and downturn-defying €26bn fundraise, shelved its float plans last year among the wild volatility that largely shuttered the IPO market globally.
While Amsterdam has long been the intended destination and fits as a home for the firm, given the euro denomination of its funds and its EU headquarters in Luxembourg, the revival triggers questions over whether London could tempt in the IPO of a similar buyout behemoth.
London’s public markets are not known for their public private equity pedigree. FTSE100 member 3i has proved a hit with investors but CVC rival Bridgepoint, which floated in 2021 in the first London private equity IPO since 1994, has faced a torrid time on the public markets.
After a stellar start in which shares surged 29 per cent on the first day of trading, Bridgepoint has cratered. Shares are currently trading at a near 62 per cent discount to their IPO price.
Analysts say that Bridgepoint’s performance is a sign that London might struggle to attract another major private equity float – and point to why it would never really have been considered a serious option by CVC.
“If you look at the share price performance of other listed PE firms [listed in New york] over the same horizon, they are not down by this much,” Nicolas Moura, EMEA Private Capital Analyst at PitchBook, tools City A.M.
“If I were in CVC’s shoes, here’s what I would consider: more regulation, more transparency, and higher costs to list in London; share price moves on companies listed not in the UK have done comparably better than those in the UK, all else equal.”
The IPO market in Europe and beyond still looks shaky. Global IPOs plunged 36 per cent in the first half of the year, according to EY, and investors are still skittish on the private equity industry amid a period of rising rates and still subdued deals.
“Nerves are still on edge in terms of sentiment towards private equity industry given the high interest rate environment and the stubborn nature of inflation is a test of confidence,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said.
“When central bank policymakers do press the pause button for a longer duration and underlying price pressures subside more significantly, there is likely to be a greater appetite for a listing,” she added.
Echoing Moura, Streeter said the recent travails of Bridgepoint would be a nail in the coffin to any faint and flickering hope that a buyout firm like CVC would consider the capital.
“Given Bridgepoint’s performance since its listing in London in 2021, there may still be considerable reticence about a UK IPO,” she added. “Its shares have slumped since its launch and just last month it warned of a tougher environment facing private equity firms.”