Across Europe, companies hoping to list are having their plans dashed by plunging equity prices. But what's bad for public stock markets may be good for private equity firms.
Having started the year with a record $1 trillion cash pile, private equity funds have found few chances to spend it, despite pressure from investors wanting them to put the money to work.
Strong demand for initial public offerings (IPO) and cash-rich companies muscled them out of deals.
But that may be starting to change, as a slide in equity markets has put off IPO investors, and slowing global growth has injected a new caution into corporates.
"Everyone in the private equity community is looking at what IPOs haven't gone ahead and whether they can get in on them," a private equity source told Reuters, declining to be named because of the sensitivity of the issue.
"I'm not sure anyone would come today to these kinds of markets, because investors will smell blood," he added, referring to the low price investors would demand in an IPO.
Shares in luxury shoemaker Jimmy Choo nudged higher after they listed on Friday. But the announcement the same day by British lender Virgin Money that it was postponing its flotation, worth up to 2 billion pounds ($3.2 billion), has dampened hopes that IPO markets might stage a quick recovery.
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Europe's blue-chip stock index FTSEuroFirst 300 has dropped over 10 percent since its Sept. 19 high. And after a record first half of the year for equity capital markets, which saw companies around the world raise almost half a trillion dollars in the biggest share sale bonanza since 2007, the balance has shifted.
Jimmy Choo had to sell shares at the bottom of its expected price range, a sign that public investors are driving an increasingly hard bargain, while companies from Italian cosmetics firm Intercos to U.K. lender Aldermore have had to scrap listings after failing to get enough demand.
Failed IPOs are not always good news for private equity firms, particularly if they are the owners looking to sell in a listing. And they still face competition for deals with trade buyers and other investors, such as sovereign wealth funds.