IPOs back? Triton’s Renk flies in opening trading

Blue Owl signs mid-market GP stakes JV.

The outlook for IPOs has been getting better through the week, with Triton Partners’ newly listed Renk Group rising over 30 percent on its first day of trading. We delve into that today, as well as a look at what profit Triton is likely to have booked on the sale.

We then switch to the world of GP stakes, where Blue Owl Capital has signed a joint venture with another investment manager to focus on mid-sized GPs. That market is expected to grow in Europe this year, Armen’s Laurent Benard and Renaud Tourmente told me in January.

Listing bump

We’re focusing on the outlook for IPOs this morning, where things look markedly better than they did in 2023.

IPOs were all but shut as a way of generating liquidity for private equity firms in 2023, but Triton Partners’ Renk Group – which postponed its own listing in October thanks to poor market conditions – has enjoyed an excellent start to its listing life this week.

Its share price was at €21.72 at press time, having closed at €19.65 on its first day of trading on Wednesday – up 31 percent from its listing price of €15. Another European IPO – albeit without private equity involvement – has also performed well, with Athens International Airport opening its first day of trading at 940c per share, up from the IPO price of 820c.

Renk, a manufacturer of drive products for military and civil customers, had already upped its placement on the Frankfurt Stock Exchange to 33 million shares from an original target of 30 million. The sale raised around €500 million and had a free float of 27 percent.

Triton still holds a majority position in Renk, which includes gear units and suspension systems in its product set and was founded over 150 years ago in Augsburg, Germany, where it still calls home.

The private equity firm will have banked a nice profit on the sale. Triton paid around €700 million when it acquired the business from automotive giant Volkswagen and minority shareholders in October 2020, PE Hub Europe understands. But the listing price of €15 gave it a market cap of €1.5 billion – a volume now over €2.1 billion thanks to the strong opening trading.

Renk was in many ways a typical deal for Triton. Forty percent of its deals have been carve-outs of corporate orphans. The London-based private equity firm has made about 20 appointments to top positions at Renk, including a new CEO and CFO, introduced a new organisation structure and invested more than €500 million in capex, R&D and M&A. Under Triton’s ownership, Renk also launched a digital customer portal and condition monitoring technology.

All of that helped Renk grow more than 24 percent annually since 2020, with its employee base jumping by around 1,000 people to around 3,500. Its revenue grew from €550 million in 2020 to €849 million in 2022, while its adjusted EBIT margin rose from 11 percent in 2020 to 17 percent in 2022.

GP stakes

GP minority investor Blue Owl Capital has signed a joint venture with Abu Dhabi-HQ’d alternative investment manager Lunate to invest growth capital in mid-sized private capital GPs, as the GP stake investment strategy heats up in Europe.

The JV will look for minority stakes in managers with fee-paying assets under management of less than $10 billion and with sector specialisations.

“We think the combined effort will be truly differentiated for mid-sized GPs and be complementary to our existing strategy focused on larger managers,” said Michael Rees, co-president of Blue Owl.

While larger European private equity managers have been taking a shine to the GP stake model – Blue Owl invested in PAI Partners last year, for instance – investment in mid-market firms has been lagging.

But GP stakes firm Armen expects activity to pick up in 2024, CEO Laurent Benard and deputy CEO and COO Renaud Tourmente told me in January.

“There is a lot of pipeline, but it takes time for LPs to get comfortable with a new strategy,” said Benard. “If you are in the US, it’s much easier because you have more than 100 transactions in the past, so everyone is aware of what GP staking is. It’s like a traditional private equity allocation.”