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Overview
First quarter private equity exit activity continued the robust trend set in the final quarter of 2020 as the value of exit deal flow totalled $124bn, up 65% on the same period a year ago. Large public listings have seen a surge in activity as buoyant public market valuations have provided private equity managers with attractive options for realizing value on their portfolio assets. The $53.3bn of public listings in the first quarter accounted for 44% of total exit activity, more than double the 3-year average of just 20% of exit activity for public listings.
Chart 13: Public listings accelerate
Source: Bloomberg
The IPOX SPAC Index which tracks the performance of a broad universe of special purpose acquisition companies (SPACs) has fallen 24% from its high point on 17th February whilst the S&P 500 Index is up 5% over the same period. SPACs which tend to target early-stage high growth companies have been hit hardest by rising interest rates as investors begin to rotate away from more speculative corners of the market. Despite the pullback in valuations, activity is set to continue with an estimated $129bn of SPAC capital currently searching for a target acquisition.
Chart 14: SPAC valuations take a hit
Source: Bloomberg
Iron ore prices have continued to surge recently as the industrial metal has gained 9.4% since the start of April. Robust demand from China for property and infrastructure projects continues to provide a tailwind in the near term whilst the rest of the world ex-China is seeing steel demand now back above pre-pandemic levels. The current high prices have incentivised the major miners to raise output and both Goldmans and Citi see the market entering a surplus from the second half of 2021 and into 2022 which is likely to see prices soften by the end of the year.
Chart 15: Iron ore prices surge
Source: Bloomberg
