What the Rise of Continuation Vehicles Means for Public Markets and SPACs
As continuation vehicles and secondaries gain momentum in private equity, Andrejka Bernatova explains what this shift means for investors, sponsors, and LPs. She shares why IPOs and SPACs should still be primary exit paths, how public markets remain open, and why SPACs offer a uniquely discreet way for sponsors to test public-market readiness.
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Mike B: Let's talk about the market shift. So continuation vehicles and secondary is very hot in the private equity world. Um, they're starting to really take the place of m and a and IPOs. We're seeing, you know, private equity, not doing the public, uh, you know, offerings. What do you think the shift means for investors, sponsors, and, and LPs?
Andrejka B: Well, it's, it's funny, I always go to sort of economics 1 0 1 and, you know, M-B-A-M-B-A classes. Um, you know, generally the formula for private exit equity exits have been one if you can get a cash exit, right? That's a, whether it's strategic or another private equity, et cetera, that's obviously a. Uh, a, a very plausible outcome.
Second, generally was the IPO, right? And then you generally run a parallel process, uh, with the public, uh, refinancing or partial exit and, uh, a, um, cash exit. Um, and secondary sort of emerged in the recent years. I, I think it's a, obviously a, a, you know, interesting option. Um, you know, when you think about the numbers of.
You know, exits via secondaries in 2020. It, it was about 5% private equity exits were, were via, uh, cvs. When you look at today in 2024, it was 20% of exits were via cvs. The public market is open, whether it's IPO or spac. Um, and I do think that, you know, we obviously have seen a number of highly successful, uh, uh, IPOs, highly successful d SPACs, hopefully including ourselves, uh, just happening.
So the public market is open and, um, you know, my view is, um, sale and, and IPOs or SPACs or public market avenues should be number one and two, uh, I don't think CV should be option two. It should be option three. It's fine for it to be an option, but not necessarily, you know, or certainly should be not an option one.
And so we are definitely seeing from our SPAC perspective that we are competing, you know, some large transactions, multi-billion dollar contribution vehicles that are being raised. And so I asked myself the question, has the public market avenue really been. Um, sort of pursued here by, by some of the sponsors.
I think, you know, one of the things that, um, I think, uh, sponsors may not be frankly aware of the benefits of a spac uh, transaction is, you know, unlike an IPO, which is very public, and you're going in and testing the waters, and it's a, you know, everything is happening over a period of, you know, months and months and many times, years, and it's very public.
SPAC allows you to actually test the public market in an extremely discreet manner. And so, um, you know, if, if that direction doesn't make sense, uh, you know, it's, nobody's gonna find out. And so I do think it's a very viable way to, for private equity sponsors to explore the public avenue in a much more discreet format.
Founder, CEO, Chairman, Managing Partner
Andrejka Bernatova is Founder, CEO, and Chairman of the Board of a publicly traded company, Dynamix Corporation (NASDAQ: DYNX), focused on acquisitions in the energy, infrastructure, and oil and gas industries. She is a seasoned investor and operator who has raised over $35B globally across sectors spanning oil & gas, water, midstream, and clean power.
Prior to Dynamix, she held CFO roles at leading water and power infra firms like Goodnight Midstream and Enchanted Rock, served as CEO of ESGEN (which merged with Florida’s largest residential solar installer to form ZEO Energy), and held investing roles at Blackstone and Mubadala. She currently leads Dynamix Capital Partners, an energy and infrastructure-focused private investment platform.
Earlier in her career, Andrejka served as CFO of Enchanted Rock Energy, Goodnight Midstream, and Core Midstream (which she co-founded), and held finance leadership roles at PennTex Midstream Partners (NYSE: PTXP). She also worked in investment banking at Morgan Stanley and Credit Suisse, and held investment roles at The Blackstone Group, Mubadala / Masdar Clean Energy in the UAE, and the World Bank. Andrejka holds an A.B. in Government with a Citation in Spanish from Harvard University.