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Alternative Market Briefing

Other Voices: Private equity firms hunt for value in public markets

Thursday, September 16, 2021

Authored by Oliver Brahmst, Chang-Do Gong, Steven Sha, and Suni Sreepada from White & Case LLP, a global law firm.

The takeover of supermarket chain Morrison's, the fourth-largest in the UK, has caused something of a stir.

The UK-based supermarket chain is the subject of a bidding war between US-based PE firm Clayton Dubilier & Rice (CD&R) and a consortium led by Fortress Investment Group. After weeks of competing bids, Morrison's' board agreed to a revised offer from CD&R, which gave the supermarket chain an enterprise value of US$14 billion. The transaction is subject to shareholder approval, with the possibility that the Fortress-led consortium could return with another offer.

The deal is among the largest public-to-private (P2P) transactions of 2021 so far. It's also symbolic of a strategy that is back in vogue for private equity investors following a quiet period last year amid pandemic-induced market volatility. Stock markets have become a prime source of deals for PE managers in recent years, driven in part by their unstoppable ability to raise capital.

Already in the first half of 2021, global take-private deal activity involving PE firms totaled US$113.5 billion. Not only was this more than double the total seen in the previous six months (US$50.7 billion), it also represents the strongest half-yearly value since H1 2007, which saw US$258.6 billion activity. Similarly, the 46 transactions recorded in deal volume in the first six mo......................

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