(Reuters) – Party City Holdings Inc, the largest U.S. party goods retailer acquired just over a year ago by buyout firm Thomas H. Lee Partners LP for $2.69 billion, is preparing for an initial public offering, according to people familiar with the matter.
Thomas H. Lee is working with banks including Goldman Sachs Group Inc (GS.N: Quote, Profile, Research) and Morgan Stanley (MS.N: Quote, Profile, Research) on a potential IPO that could come in the first half of 2014, the people said on Thursday.
The people, who asked not to be identified because the discussions between Party City and the banks are confidential, added that the full syndicate of underwriters had yet to be finalized.
Thomas H. Lee, Goldman Sachs and Morgan Stanley declined to comment while Party City did not respond to requests for comment.
Party City sells party supplies, decorations and costumes, mainly under its namesake brand and the Halloween City, Factory Card & Party Outlet and Party Packagers names. It had 12-month revenues to the end of June of more than $1.9 billion, according to Moody’s Investors Service Inc.
The IPO market has been strong in the last two months for consumer and retail related floats, including private equity-backed Burlington Stores Inc (BURL.N: Quote, Profile, Research) and Container Store Group Inc (TCS.N: Quote, Profile, Research).
In the summer of 2012, Thomas H. Lee acquired a majority stake in Party City in a $2.69 billion deal from private equity peers Advent International Corp, Berkshire Partners LLC and Weston Presidio.
The offering would return more money to investors in the Boston-based private equity firm’s latest fund, Thomas H. Lee Equity Partners VI. That fund raised $8.1 billion in 2007 and was valued at just 1.2 times its investors’ money as of the end of March, according to the California Public Employees’ Retirement System, an investor.
Thomas H. Lee invested $584 million as equity in Party City and has so far recouped about 40 percent of that through dividend recapitalizations, credit rating research notes show.