Private Equity Eyes IPO Window as Sponsor-Backed Listings Outperform

The public market is back on the table this year as an exit path.

After a tepid 2023, IPO volume jumped in the back half of 2024 — fourth quarter proceeds of $54.2 billion marked a 94 percent year-over-year increase (in evidence of the slow start, full-year growth came in at just 6.9 percent).

This cycle also appears to be particularly well-suited to sponsor-backed exits. With a market-wide retreat from the speculative binge of 2021, investors are showing a greater-than-normal appetite for the type of mature, stable businesses typically brought to market by private equity.

Data compiled by Pitchbook show a median share price gain for sponsor-backed companies of 20.7 percent in 2024 versus a median loss of 6.8 percent for venture-backed IPOs.

Share of IPO proceeds by year; data per Pitchbook, which predicts a 2025 private equity-backed share of more than 40 percent

The IPO calendar is starting to fill up with a roster of large sponsor-backed floats.

Blackstone, Carlyle, and Hellman & Friedman-backed medical supplies business Medline and Thoma Bravo-backed cybersecurity company Sailpoint are among those expected to launch in the coming months. Other possible offerings before year-end include CDPQ’s Allied Universal, Roark Capital’s Inspire Brands, Advent International’s Aimbridge Hospitality, and BDT & Company’s Panera Bread.

EQT CEO Christian Sinding says his firm is also looking at options.

“Markets are bright and open, and we have several companies that are ripe for exit,” Sinding told analysts on the firm’s Thursday earnings call. “Public markets still have a lot of challenges, but the companies we took public last year performed well — that was down to their size, liquidity, and the quality.”

EQT has already been one of the more active participants so far this cycle. Last year, the firm raised $8.6 billion via public offerings through listings including Galderma Group, Kodiak Gas Services, and Waystar Holding.

“We have a handful of IPOs planned for the year,” he added. “It depends on market conditions, but we are prepared to surf the wave.”

On the sell-side, bankers are already seeing momentum build.

Last quarter, Morgan Stanley, Goldman Sachs Group, and Citigroup posted 102 percent, 98 percent, and 95 percent increases in underwriting revenue, respectively.

“There’s no question equity activity picked up,” said Goldman Sachs CEO David Solomon on the group’s fourth-quarter earnings call.

It’s still early innings, though, says Solomon.

“[Equity underwriting] volumes are running 25 percent below 10-year averages. And IPOs are even more significantly below 10-year averages.”

“I do think some of this is sponsor monetization because sponsors have had their portfolios marked a little bit higher, they’ve been slow, and they’re kind of waiting for growth to bring up some of the values.”

“But I do see an acceleration of activity, and I expect it to continue. And there’s no fundamental reason why equity volumes ultimately shouldn’t run at 10-year averages.”