S&P Global | Portfolio company minority stake sales rise as liquidity pressure intensifies

White & Case partners Daniel Kozin and Ken Barry spoke with S&P Global about how pressure on private equity funds to return profits to investors has contributed to an increase in minority stake transactions.

Ken explained that the prominence of these transactions is being driven in part by the "desire to de-risk, the desire for sponsors to take some cash off of the table [and] the to deliver DPI to investors." He also noted that the recent growth of these minority stake sales can be seen as a reflection of managers' increasing comfort with more structured transactions and capital structures.

When discussing the benefits of these transactions, Daniel explained that minority stake sales serve to set a mark on the portfolio company's value, providing "a very clear data point on the economics of the deal," which can reassure investors that an eventual exit will be profitable.  

Read the full article here (paywalled).

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