“Funds need to recycle capital,” to show they can make profits and attract new investments, said Daniel Klausner, head of equity capital markets advisory at Houlihan Lokey. “They have been having a challenging time fundraising, as we are no longer in a zero-interest rate environment.”
With pressure mounting on private equity funds to show profits, many are pushing through share sales of the companies they own even as market conditions remain far from optimal.
PE-backed companies represented 17% of the follow-on share sales in the second quarter, up from only 6% a year earlier, according to data provider Dealogic. There were 27 deals worth US$5.3 billion last quarter, up from eight deals totaling US$1.2 billion in the year-earlier period.
