Through March 24 U.S. sponsors had sold 114 companies, down from 182 in the fourth quarter, and also down from the 147 that closed in the year-ago quarter. But disclosed deal volume hit $33.3 billion in the first quarter, only a tad below the $35.2 billion tallied in the fourth quarter of 2014, which was one of the highest M&A exit deal volume totals of this decade. For comparison, disclosed deal volume for M&A exits totaled just $22.4 billion in the first quarter of 2014. The first quarter tends to be a slow one for both buyers and sellers, coming after the rush to get deals done before the end of the year.
Of the 114 exits in this year’s opening stanza, 41 of them have disclosed deal values. Of those with published values, the headliner was a deal in the real estate sector. On February 27, IndCor Properties Inc was sold by the Blackstone Group for $8.10 billion to a Singapore-based investor group consisting of Global Logistic Properties and Singaporean state-owned GIC Private Limited. By comparison, in Q4 2014 the largest portfolio company to change hands was Nuveen Investments Inc, sold by Madison Dearborne to TIAA-CREF for $6.25 billion.
Several other large deals eclipsed the billion dollar mark during the quarter. Just after the calendar turned, NewPage Holdings Inc, a manufacturer and wholesaler of paper products, was sold by Cerberus Capital Management to Verso Paper Corp for $4.33 billion. Verso is a unit of Apollo Global Management. Next in line was another real estate deal. The Blackstone Group sold an office building located at Bryant Park in Manhattan for $2.20 billion. The acquirer is an investment group comprised of a Canadian real estate investor, Ivanhoe Cambridge Inc, which is a unit of Caisse de Depot & Placement du Quebec, and Callahan Capital Partners LLC. Another notable exit: The Carlyle Group sold Veyance Technologies Inc, an industrial specialist in conveyor belts, to Continental AG, a German leader in automotive manufacturing.
By industry, high technology and consumer products and services accounted for the lion’s share of M&A exits during the first quarter. Twenty-four of the 114 exits (21.1 percent) were in high technology, while consumer products and services accounted for 23 of the deals (20.2 percent). This marked a slight shift from last quarter, when industrials and consumer products and services were the frontrunners.
If the first quarter is an indicator of things to come and not just the crest of the wave, 2015 is going to be a huge year for M&A exit money.
Sponsor-backed IPOs, on the other hand, had a quiet opening to the year. According to Thomson One, a product of Thomson Reuters, there were just six U.S.-sponsor-backed IPOs during the first three months of the year, with an aggregate total of $1.11 billion in IPO size. Compare that to 18 IPO exits and $4.71 billion last quarter. Not only is the deal count a third of what it was, but the price per exit dropped as well. Looking back to Q1 of 2014 doesn’t paint a prettier picture either, as that quarter boasted eight IPO exits with a volume of $3.65 billion.
Of the first-quarter IPO exits, InfraREIT Inc was the most significant of the bunch in terms of dollar heft. The Texas-based electricity infrastructure real estate investment trust was brought public for $460 million. Closely trailing behind was Summit Materials Inc, which went on the public market for an even $400 million. Summit, formed in 2008, acquires companies in the field of building and construction materials. Coming in third and perhaps the IPO with the most fanfare of the quarter was Shake Shack, the popular burger and milkshake franchise going public for $105 million. International brand Shake Shack has come a long way from its humble beginnings as a single, modest cart in the middle of Manhattan’s Madison Square Park.