The total number of global private equity exits in the second quarter was 391, down 9.7% from the same period in 2022, according to data from Preqin Pro.

The valuation gap between buyers and sellers and the rising cost of credit are among the headwinds slowing such exit routes as IPOs, trade sales and secondary sales, which were all down year over year.

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Secondary sales made up 37.9% of total private equity exits, with 148 transactions during the second quarter. Trade sales and other exits numbered 200 and 37, respectively. Only six IPOs were completed during the second quarter compared to 14 in the same period a year prior.

Secondary and trade sales increased slightly compared to the first quarter, while IPOs and other exits were down.

Largest exits

The largest private equity exit in the second quarter was Housing Development Finance Corp. Ltd.'s $63.13 billion acquisition by HDFC Bank Ltd. Indian private equity firm PremjiInvest was among the sellers.

The second-largest exit was the $10.56 billion sale of Oak Street Health Inc., which operates primary care centers. An investor group including private equity firms Newlight Partners LP and General Atlantic Service Co. LP sold the business to CVS Health Corp.

Merck & Co. Inc.'s acquisition of biotechnology company Prometheus Biosciences Inc. for $10.16 billion was the third largest private equity exit during the quarter. BlackRock Inc., Perceptive Advisors LLC, Irving Investors LLC and CHI Advisors LLC were part of the selling investor group.

Healthcare stands out

Three of the top 10 exits in the second quarter were trade sales in the healthcare sector.

"Certain areas within healthcare are benefiting from secular tailwinds as the industry moves more toward value-based models," Newlight co-Managing Partner Ravi Yadav said in an email statement. Value-based healthcare is when hospitals and physicians are paid based on patient health outcomes.

Investors are more interested in companies aligned with the trend, and this "dynamic persists, irrespective of the macro environment," Yadav said.

Private equity exits, as well as deals, are expected to rebound once the economy, credit markets and the interest rate environment show signs of stabilizing. Yadav said drivers include cash-rich corporate buyers that "want to continue to acquire great assets that fill key gaps for them," and "roll up" opportunities, or private equity buying up and merging several smaller businesses with a portfolio company to form one big player in an industry.