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Highlights
- EQT sells a 6.7% stake in Galderma Group (GALD) in a significant market test.
- Sponsor-led follow-on issuance for 2024 reaches USD 17bn, reflecting strong recovery.
- Upcoming lock-up expirations signal potential for more activity in the aftermarket.
EQT’s Galderma Transaction Sets Benchmark for Follow-On Market Activity
The recent selldown by EQT (STO:EQT) of a 6.7% stake in Galderma Group (SWX:GALD), a Swiss skincare company, has become a focal point in equity markets, reflecting a strengthening environment for sponsor-backed follow-on transactions. The deal, completed in partnership with co-investors Auba Investment and the Abu Dhabi Investment Authority, raised CHF 1.28bn (USD 1.45bn), underlining robust demand for high-quality assets among institutional participants.
Sources familiar with the transaction described it as a key test of market appetite for sponsor-driven block trades, with the strong reception signaling a renewed confidence in liquidity. The success of the Galderma selldown is seen as a crucial development in the sponsor-backed follow-on market, particularly after subdued volumes in previous years.
Recovery in Sponsor-Led Follow-On Volumes
Sponsor-led follow-on issuance has made notable strides in 2024, with total volumes reaching USD 17bn year-to-date, up from USD 12.5bn in 2023, according to Dealogic data. This represents a significant recovery after volumes had plunged to USD 6.3bn in 2022 amid rising interest rates and volatile equity markets.
The rebound was aided by a series of notable transactions, including three high-value selldowns on the London Stock Exchange in 2023 that collectively accounted for USD 8.2bn. Excluding these, the recovery was less pronounced, with volumes at USD 4.3bn and deal activity trailing that of 2022.
Market participants point to the improving macroeconomic environment and growing institutional appetite for high-quality assets as key factors driving the resurgence in activity.
Sponsor-Driven Activity
With the expiration of lock-up periods for several significant holdings, further sponsor-led selldowns are anticipated in the near term. Among these are Triton’s 33.5% stake in Renk Group (ETR:R3NK), set to unlock on December 3, and Apollo Asset Management’s 51.5% stake in Lottomatica (BIT:LTMC), with its lock-up expiring on December 23.
While the Galderma transaction boosts confidence in the market’s ability to absorb substantial offerings, market insiders caution that not all stocks may attract similar levels of demand. Sponsors are advised to evaluate the timing and structure of follow-on offerings in light of individual asset quality and prevailing market conditions.
A Step Forward in Market Liquidity
The Galderma selldown represents a pivotal moment for sponsor-backed follow-on issuances, demonstrating the potential for well-structured transactions to succeed even in a challenging environment. As the market continues to recover, the deal has set a high standard for future activity, bolstering confidence in the depth and resilience of equity markets.
The broader implications of this transaction are expected to shape sponsor strategies in the months ahead, as more issuers explore opportunities to capitalize on improving liquidity and institutional demand.
