The improbable acrobatics on display in the posh gyms operator David Lloyd illustrate the ailments afflicting both public and private markets. The company, which describes itself as “Europe’s leading health and wellness group”, this week ended up at the centre of one of the private equity industry’s more perplexing strategies.
TDR, its private equity owner, in effect sold the company to another bit of TDR, after previous efforts to offload the group it bought in 2013 ran out of puff. It used a so-called continuation vehicle to shift ownership from one pocket to another, backed in part with money from, you guessed it, another private equity firm, CVC.
To normal people, this feels like Milo Minderbinder and his Maltese eggs syndicate in Catch-22, in which he repeatedly buys back eggs he had previously sold and somehow always makes a profit. In the private equity industry, however, it is a perfectly ordinary day in the office. In the first half of this year, private equity firms sold companies they owned back to themselves at a record-setting pace, providing a way out of (or back into, whichever you prefer) some $41 billion (€34.7 billion) of investments in the first six months of 2025, according to investment bank Jefferies. That is close to a fifth of all sales in the industry, and is 60 per cent above the level last year, and it comes as private equity groups find themselves sitting on $3 trillion worth of assets that they are unable to get out of, either by selling to another company or by listing them.
One of the reasons for this is a chronic case of market constipation, which has set in since the end of the zero-ish interest rates era. Back in the day, the folklore – not always accurate – was that private equity firms could borrow money cheaply, snap up companies with beaten-up valuations, mix in the magic of financial engineering and some management nous, and then sell them off again. This is now more difficult both at the borrowing end and with stock markets. The big hope was that listing conditions would improve this year. No such luck.
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[ TDR sells David Lloyd to itself after failing to find buyerOpens in new window ]
Markets have bounced back from the shock they suffered in April over US tariffs, but uncertainty remains high. The dwindling band of pesky stock-picking fund managers who really underpin the listing process are quite demanding, and often unwilling to pay the price for shares that the companies themselves, or their private equity backers, think they are worth. Over and over again in the past year or so, both bankers and private equity executives have told me this expectations gap is about to close. Any day now. They insist 2026 is the year everything will come together and the new listings will flow. Let’s see.
For now, the strain is very evident in UK markets, for example. The FTSE All-Share index has risen about 12 per cent in 2025, putting this on track to be the best annual performance since the bounceback from the financial crisis. On the new listings front, however, you could hear a pin drop.
Capital markets data provider PitchBook noted in a report this month that “exits” are the UK private equity industry’s “weakest point”. In the first half of 2025, exits were down 12 per cent from the same period last year, which themselves were down more than half from the year before that.
Plenty of money is still flowing in to private equity, which means these buyout firms are still snapping up portfolio companies, but that means the UK now has a backlog of more than 2,700 companies seeking a new home. “Ongoing listing challenges” in London’s stock market, as PitchBook puts it, are a big part of this. Indeed, the flow is going the other way, as demonstrated when Spectris delisted into the arms of private equity buyers in a near-£5 billion deal.
Bankers say London has done a good job in pulling its stock market into line with more company-friendly exchanges in continental Europe, and these improvements take time to work through the system. Still, for now, the pipes are blocked. The UK is far from alone here. Even in the US, the usual flow has been disrupted. Torsten Sløk at private markets group Apollo, noted this week that on top of the steady flow of companies delisting from public stock markets, those companies that do opt for an IPO “are getting older and older”. (Sigh, aren’t we all?)
“In 1999, the median age of IPOs was five years,” he wrote. “In 2022, it was eight years, and today, the median age of IPOs has increased to 14 years.”
Some companies do make it, of course, as buy-now-pay-later specialist Klarna demonstrated this week. But again, this company is 20 years old.
The reluctance to go public is partly because the administrative and regulatory burden is a pain. It’s also partly because stockpickers have been bulldozed by passive investment funds (although you can argue this is the result of the rise of private equity, not the other way round).
But another force has to be at play here: private equity has held on to prize assets for longer over the years, squeezing more of the juice out of them, and leaving little for public market investors. It feels only fair, then, that it pierces the blockage by accepting lower exit prices in the stock market. – Copyright The Financial Times Limited 2025
