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NEWS

General Atlantic Confidentially Files for IPO

General Atlantic, the global investment firm with stakes in companies such as Facebook and Airbnb, has confidentially filed for an initial public offering (IPO), according to sources familiar with the matter.

The firm, which manages $77 billion, is said to be considering a market debut as soon as 2024, depending on market conditions.

The decision places General Atlantic among a recent wave of alternative asset managers preparing to test the public markets, including CVC Capital Partners and HPS Investment Partners. Despite higher rates and a slowdown in dealmaking, recently listed peers like TPG and Blue Owl have seen strong performance year-to-date.

General Atlantic's decision comes at a time when IPO activity has declined globally by 30 percent year-over-year. However, performance within the broader group of publicly listed private equity firms, beyond only those listed within the past 24-months, has also trended positively. Rivals like KKR, Apollo, Ares, and Blackstone have all recently hit all-time highs, underscored by Blackstone's recent inclusion in the S&P 500 index.

The potential listing of General Atlantic, which focuses on growth equity investments in well-established, fast-growing companies, would be a slight departure from currently public managers, which tend to center around traditional buyout private equity and private credit. Case in point, General Atlantic has begun expanding its investment scope, having acquired credit manager Iron Park and established Clipway, an investment manager targeting stakes in private equity funds.

The moves reflect what is a clear reality for publicly traded firms - assets under management probably matter more to shareholders than actual fund performance.

There are two broad factors driving this: (1) Management fees on a firm's asset base are seen as more valuable than any share of carried interest, or a firm's investment profits. That's because management fees are much more stable, with the heightened visibility that comes from recurring revenue. (2) Growth in the asset base drives growth in management fees, which is what shareholders want to see. But, at a certain point, it becomes difficult to continue to notch 20 percent plus IRR deals using traditional buyout or growth strategies. The target company universe is not large enough to support fund sizes past a certain point, which forces managers to expand into lower-returning but larger asset classes like private credit, real estate, or secondaries.

Whether General Atlantic proceeds with the public offering remains to be seen. Reports suggesting a near-term listing first arrived last year, so it's clear that the firm is in no rush if they deem the market less than optimal. At this point, General Atlantic has not issued a public statement.

Sam Hillier

Sam Hillier is a reporter at Transacted covering private equity and investment banking. He previously spent time as an investment professional focused on middle market buyouts.