Pace of IPOs, exits quickens in Q2

The pace of exits rose in the second quarter as economic concerns continued to abate and buyout firms sought liquidity after nearly two years of market inactivity.

The number of completed M&A exits in the second quarter was flat compared with the previous three months. However, the total valuation of those with known financial terms improved significantly.

Eight portfolio companies went public in the second quarter, compared to four sponsor-backed IPOs in the first quarter of 2010. During the first half of 2009, Rosetta Stone Inc. (backed by ABS Capital Partners, Madison Capital Funding and Norwest Equity Partners) was the only buyout-backed IPO. In the most recent second quarter, Oasis Petroleum Inc. scored the largest completed buyout-backed IPO, with a post-offer value of $1.29 billion.

All told, Thomson Reuters (publisher of PE Week) tracked 69 buyout-backed M&A exits from April 1 through June 23. The 31 with disclosed financial terms had a total valuation of about $10.8 billion. This beat the count from the comparable period in 2009, when 47 such exits occurred with an aggregate disclosed valuation of $3.5 billion.

The latest period included four exits with values of at least $1 billion. The second quarter’s largest M&A exit was the merger of Stone Point Capital’s Harbor Point Ltd. with Max Capital Group Ltd. The transaction has an enterprise value of about $1.4 billion. That was followed by The Carlyle Group’s sale of Vought Aircraft Industries Inc. to Triumph Group Inc. for about $1.2 billion.

Walgreen Co.’s $1.1 billion acquisition of Duane Reade Inc. from Oak Hill Capital Partners and ABB Ltd.’s $1 billion pick-up of Ventyx Inc. from Vista Equity Partners were the other big exits of the period.

The Blackstone Group and Platinum Equity were the LBO shops with the most M&A exits during the latest quarter, with three each. The others with at least two sales in the period were Advent International Corp., Arsenal Capital Partners, Carlyle Group, Cerberus Capital Management, Denham Capital Management, Harbert Management Corp., Quadrangle Group and Sun Capital Partners Inc. —Eamon Beltran