PE-Backed U.S. IPOs Up For Year But Slow in Third Quarter

While mergers may be sizzling, PE-backed U.S. IPOs are not, according to data from Thomson Reuters.

There were 26 PE-backed new issues for the first three quarters of 2010, valued at $6.4 billion. The totals are double the seven IPOs that raised $3.2 billion during the first nine months of 2009.

However, the number of PE-backed IPOs slowed during third quarter. There were eight new issues that  raised about $2 billion from July to September. This is down from the 11 companies that went public in second quarter (valued at $2.2 billion).

Oasis Petroleum, whose investors include EnCap, is the largest PE-backed IPO so far this year. Oasis Petroleum went public in June and raised $676.2 million, Thomson Reuters said. Smart Technologies, which is backed by Apax Partners, came in second. Smart Tech launched an IPO in July and raised $660 million.

There are currently about 20 PE-backed companies sitting in registration and waiting to go public, Thomson Reuters said. This includes HCA Inc., Nielsen Holdings, Toys “R” Us and LPL Investment Holdings.

The Financial Times, earlier this week, reported a similar third quarter decline for PE-backed IPOs globally. The FT, citing an Ernst & Young report, said that there were 94 PE-backed IPOs in the year through September, raising $21.6 billion. This compares to 17 new offerings raising just $5.2 billion in all of 2009.

But the third quarter saw only 28 companies owned by PE firms launching IPOs that raised $5.7 billion. This is down about a third from second quarter, the FT said.

The slowdown is due to the unrealistic pricing of a few deals which has caused investors to be unreceptive, the FT said. Also, with a healthy secondary market, PE firms have been pulling offerings, the story said.