Private Equity Is Finding New Ways to Cash Out After IPOs

Private equity firms are facing a double dilemma. IPO markets, the usual path for exiting investments, have been gradually reopening, but not enough for them to cash out completely. Option B for getting paid, borrowing the money by putting it on the company’s balance sheet, will only make the first problem worse by spooking equity investors.

Enter Hellman & Friedman, which engineered a strategy last month that allowed it to cut its stake in security company Verisure Plc via an initial public offering and raise €1 billion ($1.2 billion) for a payout by issuing debt from a special-purpose vehicle that sits outside of Verisure’s balance sheet.