The shadow of Private Equity ownership on our buying decisions
The purpose of our letters and occasional blogs is to provide transparency in how we are thinking with the goal of creating stronger alignment with partners who want to think and act long-term.
Two companies in our portfolio – STAR Health Insurance and Restaurants Brands Asia – have existing Private Equity (PE) shareholders looking to exit. Everstone is looking for a buyer for its stake in RBA. Similarly, there are a few PE investors in STAR who are looking to sell their stake.
PE funds have a finite life and need to return capital. The shadow of these exits often results in a weakness in stock prices till the exit is complete. For example, one of the PE investors in STAR sold a large stake via a block deal last Friday at a discount to the prevailing market price which resulted in a 8% drop in price.Read More