Private equity grapples with USD 3 tn worth of unsold companies

The private equity industry is facing a severe liquidity crunch, with firms globally sitting on a whopping 28k unsold companies valued at USD 3.2 tn, according to consultancy Bain & Co's latest annual private equity report (pdf). Nearly half of assets have been held for four years or more, which the report says is the largest proportion since 2012.

The good and the bad: The staggering pile of assets highlights the breakneck growth of the buyout industry over the past decade, but also points to the immense challenges posed by soaring interest rates in recent years that have made exiting investments far more difficult.

Dealmaking came to a crashing halt last year as debt financing dried up: The total value of companies PE groups sold via private sales or public listings dipped 44% y-o-y in 2023 to USD 345 bn — the lowest level in a decade. The slump was even worse for portfolio companies sold to rival buyout firms, with sales tumbling 47% to USD 62 bn amid widespread pricing disagreements across the industry.

ALSO WORTH NOTING-

• BTC once again reached a new record high, breaking the USD 72k barrier and hitting USD 72,886 before paring back gains yesterday. BTC was trading at USD 72,636 as of midnight CLT.
• Companies have raised USD 3.2 bn through European IPOs since January — over double the amount raised during the same period last year. (Financial Times)

THE MARKETS THIS MORNING-

Asian markets are mixed this morning, with the Nikkei down 1.33% at dispatch time (setting it on course for a second day of losses). The Shanghai Composite is (just) in the red, while the Kospi and Hang Seng are in the green. Traders of Japanese equities were reacting to news that inflation in January was higher than pundits had expected, CNBC writes.

Looking ahead: Shares in Europe, on Wall Street and in Toronto look set to start the day in the green as stock futures inched up overnight. Wall Street is looking forward to the February consumer price index reading — it’s due out at 8:30am Eastern time in the US.

THE CLOSING BELL-

The TASI fell 0.5% yesterday on turnover of SAR 9.9 bn. The index is up 4.9% YTD.

In the green: Bindawood (+9.9%), SADAFCO (+8.2%) and ADES Holding (+6.6%).

In the red: Al Arabia (-10%), Elm (-7.8%) and Saudi Research and Media Group (-6.6%).

CORPORATE ACTIONS-

#1- Eastern Cement’s BoD has declared a dividend of SAR 86 mn at SAR 1per share for 2H 2023 it said in a filing to Tadawul. Distribution is slated for Thursday, 4 April 2024.

#2- Enma AlRawabi’s BoD has approved a dividend distribution of SAR 10 mn at SAR 0.25 per share for 2H 2023, it said in a filing to Tadawul. Eligible shareholders can cash out on Thursday, 28 March 2024.

#3- Dammam-based pipe and industrial products manufacturer Saudi ArabianAmiantit raised a total of SAR 318 mn in a rights issue of 31.8 mn shares that wrapped up on Sunday, 10 March, it said in a filing to Tadawul. The offering was 92% covered with shareholders subscribing to 31.8 mn shares of the 34.7 mn offered. A rump offering for the remaining shares is slated for tomorrow and will wrap up on Thursday, where they will be put up for grabs by institutional investors.

#4- The Capital Market Authority (CMA) has approved Arab National Bank’s request to raise its capital by 33% to SAR 20 bn from SAR 15 bn, it said in a statement yesterday. The capital hike would be made through a bonus issue, which would see one bonus share for every three existing shares owned by shareholders.