Buyout firms generate record IPO volume(3)

Private equity-backed IPOs have hit record levels of $32.4bn this year, according to data provider Dealogic, despite heavy criticism for the performance of high-profile offerings like Sports Direct and private equity-backed Debenhams.

Figures published by data provider Dealogic have shown that private equity-backed IPO volume in 2007 to date has already reached 67 percent of 2006 levels at $32.4 billion (€23.6 billion), the highest total ever recorded at this stage of the year.    

There have been 111 financial sponsor-backed IPOs so far this year, a 16 percent increase on 2006 YTD and equivalent to 62 percent of the 179 financial sponsor-backed IPOs in the whole of 2006.

However, the top 5 financial sponsor-backed flotations account for almost a third of all financial sponsor-backed IPO volume in 2007 so far, an increase over last year.

The largest such offering so far this year was EQT Partners’ $2.7 billion IPO of engineering business Tognum. The next largest were Cinven, CVC Capital Partners and Madison Dearborn Partners’ exit from packaging group Smurfit Kappa Group along with Advent International and Bain Capital’s exit from mining company Boart Longyear, both at $1.9 billion.

The positive results are despite the dramatic decline of non-private equity-backed retailer Sports Direct, which has halved in price since being listed in March, and the weak performance of CVC Capital Partners, Merrill Lynch and TPG-backed department store Debenhams, which has slipped down to £1.19 from an offer price of £1.95 last year.

Apax Partners and Permira decided against a public markets exit for retailer New Look – which remains unsold – even after a secondary auction for the company fell through due to lack of bidders. A banking source said at the time that the buyout firms would not consider an IPO even though the bidding had collapsed.   

However, there are plenty of positive stories to tell about the after-performance of private equity-backed IPOs. Blackstone-backed Cineworld’s share price is up 23 percent at £2.09 percent from its £1.70 float.