No go for IPOs as New Look compounds listless week

Francois Rowell
12 February 2010

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While talk is still ongoing regarding the flurry of GPs signaling their intention to list portfolio companies, many are already postponing plans as prices fall far below expectations. Francois Rowell reports

Just two weeks ago, all the talk was of the exits that would be achieved through flotations, but now three private equity backed businesses - Travelport, Merlin and today New Look - have postponed listing plans in as many days. The perceived window of opportunity may be rapidly closing.

BC Partners-backed care home business Medica may have been among the last to squeeze through, having successfully raised €275.5m through an IPO at the beginning of the week. This, though, was only after it had lowered its share price from the guide range of €16-19.5 to €13 following a lukewarm reception in the markets.

The IPO difficulties highlighted by Medica have done nothing to settle investors' jangling nerves. As confidence in the public markets has started to slide, potential investors have balked in the face of pricing volatility.

Blackstone-backed travel business Travelport was the first to fall, pulling out of its proposed £1.2bn flotation on the London stock exchange this week after it saw its original guide price range of 210-290p per share sink to 180p. Hot on its heels, and in a further blow to Blackstone, fellow portfolio company Merlin Entertainments, a theme park operator, shelved its £2.16bn public listing as the price again plummeted.

The week culminated in the planned IPO of Permira- and Apax-backed retail chain New Look, which was to value the business at around £1.7-1.8bn, being postponed today. The investors must be feeling a sense of déjà vu: the company had to shelve plans to float two years ago when suitors balked at a similar price.

Question marks will now be hovering over upcoming planned listings such as Travelport rival Amadeus, backed by BC Partners and Cinven, which has plans to raise €3bn on the Spanish stock market.

With markets currently hanging in the balance an alternative to an IPO is running dual track processes. Recently, the previously IPO-bound Pets at Home was sold by Bridgepoint to KKR in an SBO, while German telecommunications giant Kabel Deutschland has ditched its listing and is in the latter stages of an auction that could see the business sold for more than €5bn.

The recent rally in the European markets following the announced bailout package for Greece might be cause for optimism for the companies looking to list. However, while the announcement of intent has been made, no solid action is yet in place and, with continental European countries being exposed to Greece, a default on debts would certainly cause further tremors.