Shares in Bridgepoint Advisers soared 29 per cent on their debut, as investors raced to back the rare listing of a buyout group in London during a global boom for the private equity industry.
Bridgepoint’s electric first day of trading comes after private equity firms struck more than $500bn of deals in the first half, a record pace powered by low interest rates and depressed valuations in some markets.
Founded in 2000 after a management buyout from NatWest Equity Partners, Bridgepoint raised £300m in the initial public offering. The group, which sold shares at 350p, said the money will be used to cut debt and fund investment. Existing investors sold about £489m of shares.
The London-based group joins a small coterie of publicly traded European buyout companies, including FTSE 100-listed 3i Group, Switzerland-based Partners Group, France’s Eurazeo and EQT of Sweden, which listed in 2019. In the US, a number of big-name buyout groups are listed including Blackstone, KKR, Carlyle and Apollo.
The stellar debut shows private equity groups “are particularly well-positioned in an environment of lower for longer interest rates”, said Will Howlett, an analyst at Quilter Cheviot analyst. “Private equity and private debt have outperformed public market equivalents and as a result institutions are increasing allocations in the hunt for decent returns.”
Funds amassed high levels of cash during the coronavirus pandemic and are benefiting from the very low cost of borrowing and opportunities in perceived areas of value such as the UK.
The industry’s record-breaking pursuit of UK companies, however, has drawn furious criticism from some asset managers that businesses are being picked up on the cheap given the twin hits from Brexit and then the pandemic.
Nonetheless, Bridgepoint’s flotation is a welcome fillip for a London market with a mixed record for IPOs this year. In March, Deliveroo was branded the worst IPO in London’s history after shares in the food delivery app tumbled 26 per cent on their opening day, though fintech Wise enjoyed a strong debut in a rare direct listing earlier this month.
Bridgepoint, which is best known for having owned sandwich and coffee chain Pret A Manger, has a free float of about 27 per cent of the company and ended the day with a market capitalisation of £3.7bn.
Investors who missed out on the allocation they wanted in the share offering helped drive the stock higher on Wednesday, said one fund manager.
Bridgepoint sold Pret A Manger to investment group JAB Holdings in 2018, and has backed Dorna, which holds the international rights to MotoGP. Last month Bridgepoint took a stake in restaurant group Itsu and it is also a long-term backer of online cycling and running wear retailer WiggleCRC.
The buyout group, which until now was owned by 140 of its staff and Dyal Capital Partners, has opened offices in New York, San Francisco and Amsterdam in recent years. Last year it bought EQT’s credit arm, expanding its lending capabilities as the pandemic left companies in need of fresh financing.
Additional reporting by Attracta Mooney
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