Sovereign wealth funds have been prominent buyers in listed companies going private in recent months, and yet another big deal is on the horizon: a proposed GBP4.6 billion (US$5.7 billion) takeover of Dechra Pharmaceuticals by the Abu Dhabi Investment Authority (ADIA) and Swedish private equity firm EQT.

The partners have until 11 May to make a firm proposal for the veterinary pharmaceuticals group, which has been struggling with volatile market conditions – in February it issued a profit warning. This week, the price of the stock was still a quarter down over April 2022, despite an uplift from M&A speculation. The deal would the biggest take-private in the UK so far this year. So far this year, Europe has seen around US$20 billon in proposed deals.

Private equity firms and sovereign investors are seeking to take companies private, particularly at more favorable prices. Valuation expectations in the past have been high as boards have regarded stock prices as under-valued. More realistic expectations are likely to see an increase in take-private transactions.

ADIA has been among the most active in such transactions. Last month, a subsidiary of ADIA backed Blackstone’s deal to take Cvent, meetings technology provider, private in a transaction valued at an enterprise value of approximately US$4.6 billion. ADIA will be a significant minority shareholder under the deal, which is expected to close in mid-2023.

ADIA also became a minority shareholder in the buyout of Coupa Software by Thoma Bravo, which was completed in February. The cash transaction for the business spend management company was valued at approximately US$8 billion. The investment partners took advantage of the effects of high inflation and weak consumer demand on tech sector stocks, which have become acquisition targets for private equity firms.

GIC is also putting its weight behind big take-private deals with an emphasis on listed real estate. In September, GIC and Oak Street agreed to acquire NYSE-listed real estate investment trust Store Capital in a take-private deal for about US$14 billion.

The deal was followed in February by GIC and Centerbridge Partners taking Nasdaq-listed logistics company INDUS Realty private in an all-cash deal valued at about US$868 million. INDUS owns 42 industrial/logistics buildings in the US. The transaction is expected to close in mid-2023.

Related funds ADIA GIC