Private Is The New Public

Public companies are increasingly going private.

Private-equity firms like KKR and Blackstone, flush with cash, made 2021 a record year for public companies going private. Dealogic says 47 US companies were taken private in 2021, the highest total since 2010.

This year, even though central banks are raising interest rates, the delisting of public companies is still very hot. So far, 26 US deals have been advertised, with a total value of $121 billion. In January, Vista Equity Partners and Evergreen Coast Capital offered $16.5 billion for Citrix Systems. Elon Musk promised $44 billion to Twitter—before expressing some reservations. KKR and Global Infrastructure Partners raised $15 billion for data centers expert CyrusOne.

It’s not happening only in America. Funds are also shopping Europe for companies with steady cash flow, reasonable revenue growth and a capacity to support high debt. Blackstone Real Estate made a €21 billion ($22.5 billion) offer to Netherlands-based warehouse portfolio Mileway. In Italy, Blackstone and Edizione, the company that manages the fortune of the Benetton family, lined up a €58 billion bid for infrastructure group Atlantia. It is the largest-ever private deal for a European-listed company. In Australia, too, record levels have been reached with Ramsay Health Care; the $14.8 billion offer that KKR, Qatar Investment Authority, Abu Dhabi Investment Authority and the Hesta pension fund are throwing to the hospital operator is the biggest private-equity buyout ever seen on that side of the Pacific Ocean.

The Russia-Ukraine war and higher interest rates could temper enthusiasm. Although recent stock market declines may be creating bargains for investment funds, still sitting on more than $1.3 trillion in unspent capital.