Exits Stall In Slow M&A, IPO Market

So how are buyout firms going to exit all those giant companies they’ve bought over the last three years or so?

The first quarter provided few answers. U.S.-based buyout firms sold an estimated 50 companies in the first quarter, down from some 74 a year ago, and took just two public, according to data from Buyouts publisher Thomson Financial (see table below). None appeared to be anything approaching blockbuster deals. The 21 M&A sales with disclosed values totaled just $5.1 billion, down from $12.7 billion in the year-ago period. The two IPOs in the first quarter raised $267 million.American Capital Strategies scored the largest number of exits during the latest quarter, with at least four separate deals, according to Thomson Financial. Only the sale of drilling fluid company Anchor Drilling Fluids USA Inc. to Castle Harlan Inc. had a disclosed value, at $250 million.

Audax Group LP, Sterling Capital Partners, and Stonington Partners Inc. all sold at least two companies during the first quarter, according to Thomson Financial.

The prize for largest exit of the quarter goes to Harbinger Capital Partners, which sold soda ash maker General Chemical Industrial Products Inc. to Tata Chemical Ltd. for $1 billion. Harbinger Capital also had the next largest with the sale of Kelson Holdings LLC’s Redbud power plant to an investor group for $852 million.

On the IPO front, RiskMetric Group Inc., a provider of risk management and corporate governance products and services backed by W Capital Partners, started to trade on the New York Stock Exchange on Jan. 25; its shares had risen 13.8 percent from the IPO price as of press time. The offering raised gross proceeds of $245 million through the sale of 14 million shares at $17.50 each.

Heritage Crystal Clean LLC, a Bruckmann, Rosser, Sherrill & Co.–backed environmental services company, went public March 12. Heritage Crystal sold 1.9 million shares at $11.50 each, raising gross proceeds of about $22 million. The stock closed at $14.19 on its first day of trading on Nasdaq, and traded at a 33.5 percent increase from the offer price as of April 2