Investors are down on (private equity IPO's) for two reasons. First, as I discussed last week in relation to the tepid reception of Oaktree's listing, investors struggle to value the performance fees in private equity funds due to their convoluted ownership structure.
And second, there's a perception that the public markets are merely the dumping ground for the industry. Unlike most companies, which sell shares to raise capital for growth, the firms above went public after experiencing exceptional growth. If they don't need the capital, maybe they're just going public to help their founders get rich at the public's expense?
Line up unit-holders for your stake in a private equity underwriter (PEU) and the opportunity to indemnify billionaire co-founders from tax increases. Unit holders have a purpose, liquefy, crystallize, monetize, provide co-founders ka-ching.