Quadrant forms part of private equity firms testing the IPO waters

14/03/2016 News

It's a busy time for sponsor coverage investment bankers and private equity lawyers. As soon as next week, private equity firms, with their bankers and lawyers, will begin visiting fund managers to sound out their appetite for IPOs.

As many as 23 private equity-backed initial public offerings could list on the Australian Securities Exchange this year as general partners seek to return money to their limited partners within a fund's 10-year life span.

Private equity firms seek to sell their portfolio companies after holding them for three to five years to return funds to their limited partners that invest typically for a 10-year period.

Since the final quarter of last year when 32 IPOs priced, which was more than half the total IPO volume of 59 for the entire year, lawyers and investment banks have busily strategised with private equity firms on potential portfolio sales.

"The IPO market has been buoyant given the strong capital flows and demand from equity funds to invest in new businesses," Fort Street Advisers co-founder Richard Hunt told DataRoom. "There is a significant IPO pipeline and if market conditions remain strong this is likely to reduce the overall level of M&A as vendors elect a public market exit as opposed to a trade sale."

Archer Capital, Pacific Equity Partners, Quadrant Private Equity, Champ Private Equity, Catalyst Investment Managers, Ironbridge, Carlyle Group, TPG and KKR all have investments in their portfolio that are more than three-years-old. Pacific Equity Partners alone has six investments that are more than three-years-old: renewable energy company Energy Developments, American Stock Transfer and Trust Co, cinema operator Hoyts Group, biscuits and snack-food company Griffin's Foods, smoke detector and video security company Xtralis, share registry and superannuation administrator Link Market Services.

Quadrant Private Equity 1 fund, a $265 million capital pool with a 2005 to 2015 vintage, has yet to sell mortgage business Seniors Money International and orthopaedic services company Ortho Group.

"Private equity IPOs could come to market as early as next month," Blackshaw told DataRoom.

Depending on the size and complexity of deals, IPO documentation preparation takes two to four months. Some private equity firms such as Carlyle and TPG in the case of healthcare provider Healthscope are continuing to consult with investment banks as to the best sale strategy: an IPO or a so-called trade sale to a company.
If an IPO exit is chosen, more Australian private equity firms will look to keep a significant stake in the company rather than sell out completely.
(First published in The Australian, Feb. 22nd 2014) 

Writen by Global Administrator, 14/03/2016 News