Today, Bloomberg News is reporting more than half of U.S. IPOs planned this year will come from buyout shops. In fact, PE-backed companies are seen offloading $14 billion in shares via IPOs. This is more than double the $6.6 billion raised in PE backed IPOs in 2011, the story says. Notable candidates include HCA Holdings, Nielsen Holdings, Kinder Morgan and roughly two dozen other companies owned by buyout shops that filed with the SEC to go public.
The Wall Street Journal, in a Dec. 30 story, also foresees more IPOs from PE firms that have been sitting on their large holdings since the middle of 2008, when the economic crisis shuttered the new issues market. In fact, WSJ expects more billion-plus offerings this year. The story also named HCA, Kinder Morgan and Nielsen as waiting to launch their IPOs.
Nielsen Holdings, which is backed by KKR, Thomas H. Lee Partners, the Blackstone Group and Carlyle, is the most likely candidate to go public, PE sources said. In June, Nielsen, the television audience rating company, filed to raise $1.75 billion. Nielsen could price its offering at the end of this month, according to CNBC.
Who else will likely tap the equity markets? (And yes, I’m well aware that Groupon and Facebook are the top contenders to go public but I am choosing to focus on other, more ignored companies).
Rosetta, the digital ad agency owned by Lindsay Goldberg, is likely to go public this year, two bankers say. Rosetta is expected to produce $215 million revenue in 2010 on roughly $40 to $50 million EBITDA, sources say. The ad agency, which is profitable, could sell for the high price of $400 to $500 million, one of the bankers says. “Not a lot of folks could buy that kind of agency,” the person says.
Merkle, the relationship marketing agency, could also go public soon, a banker says. In September, Technology Crossover Ventures took a minority stake in Columbia, Md.-based Merkle (the source estimates TCV’s investment at $70 million). However, Merkle’s IPO is more likely in 2012, the source says.
But don’t expect Demand Media’s IPO any time soon, sources say. In August, the online content creator filed to go public but the IPO has been stalled by accounting issues. Demand Media doesn’t expense the cost of paying its writers upfront but instead amortizes expenses over five years. Demand Media has raised more than $355 million in financing from investors such as Oak Investment Partners, Goldman Sachs and Spectrum Equity Investors.
Regulators are reportedly taking a closer look at the company’s accounting practices. If Demand Media’s accounting treatment is not accepted by regulators–and sources don’t think it will be– the value of its $125 million IPO will likely be significantly reduced, sources said.
“Without [SEC approval], I doubt they will get out this year,” one banker says.