Private equity at the gates of public markets

Private equity investment in a public company is always a headline-capturing affair. The epic tale Barbarians at the Gate — The Fall of RJR Nabisco, chronicles how Kohlberg Krabis and Roberts, a large American private equity house, took over RJR Nabisco for almost $26 billion in 1987. The book has memorialized the thrill and excitement surrounding such an affair. There has usually been a clear distinction between private and public equity investments. The style, objective, structure and active involvement are distinctive between these two classes of investment. But in many instances, the “barbarians” like to cross over and hunt for deals in public markets. The appeal is clear: public companies are prized targets by the way they naturally graduate to become public, and most shareholders of public companies are more or less willing sellers at the share price plus some premium. Private equity investments in public markets come in two