More than half of the U.S. initial public offerings planned for this year are from private equity firms as KKR & Co., Blackstone Group LP and Carlyle Group try to unload some of their biggest leveraged buyouts.
HCA Holdings Inc., Nielsen Holdings BV, Kinder Morgan Inc. and more than two dozen other companies owned by private equity firms have asked the Securities and Exchange Commission for permission to sell $14 billion of shares in IPOs, or 53% of the amount on file, according to data compiled by Bloomberg. The total is more than double the $6.6 billion raised in 2010, when their initial offerings accounted for 15% of sales.
Buyout firms are betting that a rebound in equity values will increase demand for some of the debt-fueled acquisitions completed as credit markets started to freeze four years ago. While the Standard & Poor's 500 index has recovered all its losses since the collapse of Lehman Brothers Holdings Inc. in 2008, the funds are now seeking buyers for companies with almost twice the net debt to operating cash flow as the average private equity-backed IPO last year, data compiled by Bloomberg show.
“Private equity is certainly going to continue to bring to market either to monetize or delever the companies they bought,” said Robert H. McCooey Jr., senior vice president of new listings and capital markets at Nasdaq OMX Group Inc. in New York. “That will be a big piece of the IPO market.”