UK private equity firms are selling assets to themselves as traditional exit routes dry up.
Disposals to so-called continuation funds are the most popular option for private equity executives seeking an exit from their investments, according to a poll of 200 senior UK-based industry professionals carried out by Numis.
The technique involves a private equity fund selling an asset it has owned for several years from one of its funds, where investors have been promised a return in cash, to a newer fund where backers are not due to get their money back for a few years.
Private auctions, the preferred route in last year’s poll, are now the least popular of four exit options as a more difficult debt financing environment combines with political uncertainty ahead of UK and US elections and lower valuations.
