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An equity carve-out, also known as a partial spin-off, is a corporate restructuring strategy where a parent company sells a minority stake in a subsidiary to the public through an initial public offering (IPO). This allows the parent company to raise capital while still retaining control over the subsidiary. An equity carve-out is used to unlock the value of the subsidiary, attract strategic investors, and create a separate valuation for the subsidiary that may not have been fully recognized within the parent company.
A large conglomerate carves out a 30% stake in its fast-growing technology division, selling shares in an IPO to raise funds while keeping control of the subsidiary.
• Involves selling a minority stake in a subsidiary through an IPO.
• Allows the parent company to raise capital while retaining control.
• Enhances the subsidiary’s visibility and access to capital markets.
An equity carve-out is when a parent company sells a minority stake in its subsidiary to the public through an IPO.
Companies use carve-outs to raise capital, unlock value, and create a separate valuation for the subsidiary.
The subsidiary gains access to capital markets, increased visibility, and greater operational independence.
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