Private Equity Firms Open ‘Toolbox’ as IPO Drought Persists

Private equity firms are reportedly rethinking exit strategies as initial public offerings (IPOs) remain scarce.

In a report Sunday (June 8) following the industry’s annual European conference, the Financial Times (FT) said private equity (PE) executives were prioritizing other methods for exiting their investments, including breaking up businesses to sell them off in smaller pieces or selling companies to themselves through “continuation funds.”

“I can’t remember in my 20 years of growth equity investing, not having an IPO window open for this kind of long period of time,” said General Atlantic Co-President Gabriel Caillaux. “That is obviously calling us to rethink not strategy, but some tactical aspects.”

According to the report, buyout firms have amassed a record backlog of unsold assets, as higher interest rates and market turmoil have made it tougher to take companies public or sell at acceptable prices, pressuring them to find other ways to provide returns to investors.

The volume of private equity-backed IPOs has fallen since the heyday of 2021, with just nine this year in Europe and the U.S., versus 116 in the same period in 2021.

The head of PE at one large firm told the FT that IPOs now ranked behind break-ups and minority stake sales as an exit option.

“The IPO is number three on the list these days,” this executive said. “The toolbox is really being opened now.”

The report also noted that executives had hoped the election of President Donald Trump would usher in an IPO revival. Instead, the president’s policy volatility has closed the capital markets to most potential issuers, the FT added.

In fact, a separate report last month from the news outlet noted that the current market volatility had led to a resurgence in special purpose acquisition companies (SPACs). As of that writing, 44 SPAC offerings had raised $9 billion for the year, compared with 57 companies raising $9.6 billion during the whole of 2024.

Among the companies going public this year via the traditional route are Circle, which last week became the U.S.’s first publicly traded stablecoin issuer.

But despite “the fanfare, Circle faces several challenges,” PYMNTS wrote. “First, the stablecoin market is becoming competitive. Those very same blue chip banks that helped take Circle public are themselves considering becoming stablecoin issuers.”

As covered here last month, JPMorgan Chase, Bank of America, Wells Fargo and Citigroup are exploring the launch of a jointly operated stablecoin.