Key Takeaways
- • CVC Capital Partners is assessing a bid to take Verisure (VSURE.ST) private again, roughly one year after the Stockholm listing, according to a Financial Times report cited by Reuters Breakingviews.
- • Verisure's shares were priced at just over €9 on October 21, about 30% below its €13.25 IPO price.
- • A buyout at a 25% premium would imply an enterprise value of about €17 billion, with at least €9.5 billion of debt financing, or roughly nine times analysts' expected €1.9 billion full-year EBITDA.
- • Breakingviews argues the episode is a warning sign for the sector, given private equity's estimated $4 trillion backlog of unsold assets and the reliance on public listings as exit routes.
Summary
The Stockholm listing of security firm Verisure was intended as a success for European buyout firms. According to Reuters Breakingviews, it was the region's largest listing since 2022 and showed that public markets would absorb large private companies without demanding a steep discount. That matters because private equity managers are sitting on an estimated $4 trillion backlog of unsold assets.
A year after the float, CVC Capital Partners is assessing a bid to take the struggling stock private again. Before the Financial Times disclosed CVC's interest on October 21, Verisure's shares traded at just over €9, about 30% below the €13.25 IPO price. The shares began to sell off in January amid broad market turmoil for software and data companies, driven by fears of AI disruption. Business services peers including RELX and Experian, which analysts often cite as comparables, fell at the same time. Breakingviews notes that Verisure's human-led installation and monitoring business seems an unlikely target for AI disruption. Its lack of large listed home alarm peers in Europe may limit analyst and fund manager coverage, and its debt, at 2.7 times EBITDA as of June 30, may weigh on investor confidence. The company targets a leverage ratio of 2.5 times.
Breakingviews calculates that a buyout at a 25% premium to the undisturbed share price would imply an enterprise value of about €17 billion, of which at least €9.5 billion could be debt-funded. That equates to around nine times the €1.9 billion EBITDA analysts expect for the full financial year, per a Visible Alpha poll. Assuming 8% annual revenue growth and an EBITDA margin expanding from 46% to 50%, in line with Visible Alpha forecasts, borrowings could fall to €7 billion by 2031 if free cash flow repays debt. An exit at the same multiple would leave equity investors with about €20 billion, an annualised return of over 20%.
Verisure has previously thrived under private ownership, having been delisted in 2006 and passing from EQT to Hellman & Friedman before its IPO. Breakingviews argues that while spotting mispriced businesses is central to buyout work, the fact that Verisure may already be a take-private target again should concern the sector, which still has many other assets to sell.
A year after the float, CVC Capital Partners is assessing a bid to take the struggling stock private again. Before the Financial Times disclosed CVC's interest on October 21, Verisure's shares traded at just over €9, about 30% below the €13.25 IPO price. The shares began to sell off in January amid broad market turmoil for software and data companies, driven by fears of AI disruption. Business services peers including RELX and Experian, which analysts often cite as comparables, fell at the same time. Breakingviews notes that Verisure's human-led installation and monitoring business seems an unlikely target for AI disruption. Its lack of large listed home alarm peers in Europe may limit analyst and fund manager coverage, and its debt, at 2.7 times EBITDA as of June 30, may weigh on investor confidence. The company targets a leverage ratio of 2.5 times.
Breakingviews calculates that a buyout at a 25% premium to the undisturbed share price would imply an enterprise value of about €17 billion, of which at least €9.5 billion could be debt-funded. That equates to around nine times the €1.9 billion EBITDA analysts expect for the full financial year, per a Visible Alpha poll. Assuming 8% annual revenue growth and an EBITDA margin expanding from 46% to 50%, in line with Visible Alpha forecasts, borrowings could fall to €7 billion by 2031 if free cash flow repays debt. An exit at the same multiple would leave equity investors with about €20 billion, an annualised return of over 20%.
Verisure has previously thrived under private ownership, having been delisted in 2006 and passing from EQT to Hellman & Friedman before its IPO. Breakingviews argues that while spotting mispriced businesses is central to buyout work, the fact that Verisure may already be a take-private target again should concern the sector, which still has many other assets to sell.
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