85 406
Fashion Jobs
LULULEMON
Visual Merchandising Specialist | Toledo Local
Permanent · TOLEDO
LULULEMON
Community Specialist | Martha's Vineyard
Permanent · EDGARTOWN
LULULEMON
Community Specialist | Market Street, Lynnfield
Permanent · LYNNFIELD
LULULEMON
Expeditor (9pm - 2am) | Scottsdale Fashion Square
Permanent · SCOTTSDALE
LULULEMON
Visual Merchandising Specialist | University Place, Orem - Full Time
Permanent · OREM
LULULEMON
Visual Merchandising Specialist | The Shops at Mission Viejo
Permanent · MISSION VIEJO
LULULEMON
Community Specialist | Village Meridian
Permanent · MERIDIAN
NORDSTROM
Customer Service Representative - Montgomery Mall
Permanent · BETHESDA
NORDSTROM
Retail Stock - Chandler Festival Rack
Permanent · CHANDLER
NORDSTROM
Customer Service Representative - Old Orchard Center
Permanent · SKOKIE
NORDSTROM
Chef - Nordstrom Grill - City Creek Center
Permanent · SALT LAKE CITY
NORDSTROM
Retail Stock - Mayfair Collection Rack
Permanent · WAUWATOSA
NORDSTROM
Asset Protection - Agent - International Plaza
Permanent · TAMPA
NORDSTROM
Area HR Business Partner - NE Stores - CT/NY Market
Permanent · NORWALK
NORDSTROM
Retail Stock - The Village at Totem Lake Rack
Permanent · KIRKLAND
NORDSTROM
Service Experience Rep - Fashion Island
Permanent · NEWPORT BEACH
NORDSTROM
Asset Protection - Agent - Pentagon City
Permanent · ARLINGTON
NORDSTROM
Asset Protection - Security Ambassador - Pentagon City
Permanent · ARLINGTON
NORDSTROM
Asset Protection - Agent - Westfield Culver City Rack
Permanent · CULVER CITY
NORDSTROM
Retail Stock - The Palms at Town & Country Rack
Permanent · KENDALL
URBN
Anthropologie Visual Merchandising Manager
Permanent · COLUMBIA
URBN
Urban Outfitters Visual Merchandising Manager
Permanent · SEATTLE
By
Reuters
Published
Mar 4, 2011
Reading time
3 minutes
Download
Download the article
Print
Text size

Buyout firms see strong year for IPOs

By
Reuters
Published
Mar 4, 2011

March 3 - Private equity firms see a strong year for IPOs as institutional investors back growing companies and buyout firms hold on to large stakes in the hope of getting even greater returns.


Prada's S/S 2011 menswear campaign. The company announced plans for a Hong Kong IPO earlier in the year.

After a rocky start in 2010 as public markets rejected a number of private equity-backed initial public offerings (IPOs), the volume of private equity IPOs has picked up as investors see some successes and get ready to welcome more.

A host of companies in Europe and the United States are on track to float as buyout firms see greater value from listing companies rather than selling, particularly to private equity rivals.

But some sceptics remain, believing institutional investors resent public markets being used as a dumping ground for overgeared companies, which are only enjoying a brief respite from tough conditions.

"The IPO market is wide open," said Kevin Albert, managing director at fund of funds Pantheon, adding that companies with strong growth prospects, as opposed to those seeking mainly to deleverage, are attracting investors.

There were 145 IPOs and share sales in 2010, worth a total of $38.7 billion, according to data and consultancy firm Preqin.

And so far this year, 11 private equity IPOs have raised $10.2 billion, Preqin said, with some large deals currently in the pipeline, including Danish cleaning and services firm ISS [ISSHG.UL] and U.S. hospital operator HCA, which if it prices at the top of its range, could be the largest private equity float in U.S. history.

"Exit activity is increasing dramatically … and I think will increase this year well above last year," Carlyle co-founder David Rubenstein told the SuperReturn private equity conference on Tuesday.

EARLY SUSPICION

Initially suspicious that private equity firms were seeking to offload over-leveraged businesses that had no other obvious buyers, institutional investors rejected IPOs such as fashion retailer New Look and travel bookings firm Travelport.

But a number of other companies have traded strongly after listing, prompting firms to think they can reap even greater profits taking the IPO route.

John Hahn, who leads Providence Equity's European private equity investment activities, said the firm opted to float German cable company Kabel Deutschland as it had good visibility over the company's performance for the next three to five years.

"It was incredibly hard because if we had taken the full sell side it would have been incredibly successful deal; but we thought that this story would resonate with public investors," Hahn told the conference.

Kabel Deutschland, which priced last March, is 75.5 percent above its listing price.

Its performance has been echoed by others, such as Danish jeweler Pandora, which priced its $2.1 billion IPO in October, and is now trading at about 47 percent above the listing price.

U.S. pipeline company Kinder Morgan Inc, backed by Carlyle, went public in February, rising 3.5 percent on its debut.

Some say these successes are prompting many private equity investors, who frequently like to get all their money back in one go, to view IPOs more favourably as an exit route.

"If you have got a company that you think has large potential you are better off holding on and selling down in tranches," said Pantheon's Albert.

However, some concerns remain, and certain markets still remain resistant to private equity floats.

"In the UK, there is immense scepticism amongst the larger investors about private equity 'dumping' companies onto the market which is definitely a constraint," said Jon Moulton, chairman of Better Capital.

"There is concern that some of the stuff being offered is enjoying a brief period of prosperity," Moulton said. "It is a tough sell and larger IPOS are only going to be doable at moderate valuations."

By Simon Meads and Megan Davies
(Additional reporting by Kylie Maclellan in London; editing by David Cowell)

© Thomson Reuters 2024 All rights reserved.