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Private equity firms in Europe turn to IPOs to cash out

26/05/14

Initial public offerings (IPOs) are coming back into fashion as firms react to shifts in the market, potentially creating a friendly atmosphere for jobs in accountancy and other areas to become more common.

This trend has been especially obvious across Europe, where the rapidly improving state of the public market is encouraging organisations to push the boat out in terms of IPOs.

One thing driving this development is a tendency among insurance firms to look at the equity and credit markets as being over-priced, meaning the decision to move into the public arena is a risky but potentially profitable one.

Sales to rivals or other companies are still the dominant route for private equity firms to unload their European investments, but this could be set to change over the coming years as the situation continues to develop.

The number of private equity-backed IPOs almost quadrupled in 2013, according to new figures published by the European Private Equity and Venture Capital Association.

Multinational firm the Carlyle Group is a recent firm to take this step, raising funds by selling shares in Spanish industrial testing company Applus Services SA and brushing off interest from rival companies in favour of an IPO.

While it can be difficult to equate this kind of large-scale activity with the jobs market on the ground, it seems likely that a jump in private equity activity underlined by the new faith being placed in IPOs will be good news for people looking for jobs within the sector.

"With strong exits comes new and repeat investment at a great time when (according to Goldman Sachs) insurance companies are looking to the alternatives for a stronger investment return," said Marks Sattinmanager for investment and insurance David Harvey.

He feels that the changing mood within the sector and the willingness to get involved with IPOs in order to raise cash are symptomatic of growing positivity among businesses, not just in the UK but on an international level.

"Hopefully, all-in-all, this will lead to optimal fund raising conditions, which is one of the main catalysts for job creation in the market. This is especially true for accountants in the alternatives market as a whole," added Mr Harvey.

His comments chime with recent findings from Goldman Sachs, which revealed that many chief financial officers are keen to get involved with riskier asset classes in a bid to improve their balance sheet.

Michael Siegel, head of insurance asset management at Goldman Sachs's asset management arm, declared: "Insurers remain focused on the search for return, but view corporate bonds and public equities as either overvalued or fairly valued."

Chief information officers (CIOs) are also getting involved, he added.

"Against a backdrop of low yields and growing concern about monetary tightening, CIOs are planning to increase allocations to less liquid assets, alternatives and equities," concluded Mr Siegel.

With this in mind, accountants or people with expertise in the world of IPOs should get in touch with our recruitment experts at Marks Sattin, who will be keeping an ear to the ground about any new positions that could emerge.

Utilising this kind of expertise could be the difference between finding a good job and an unappealing one.

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