If private equity funds start in earnest next year to disgorge stakes in the large companies they leveraged up and took private in the run-up to the summer of 2007, there could be two dozen or more initial public offerings of $1 billion or bigger in 2010, bankers predict.
Forget public market equity investor reluctance to bail out the sponsors or accept unreconstructed balance sheets. There could be some great companies up for grabs. Bankers are looking at such prospects as TXU, the US utility that a consortium led by KKR and including Texas Pacific Group and Goldman Sachs bought in 2007 for $32 billion, and card processor First Data, another KKR-led LBO, valued at $29 billion two years ago.
Public equity market investors aren’t looking for token 10% to 15% stakes just to put a nice valuation on such companies to the benefit of their sponsor/owners. An average of 30% of a company’s stock is now floated in a typical initial pubic offering.
"There are some unprecedented large corporate and LBO assets poised to come to the IPO market in 2010," says Tyler Dickson, head of global capital markets origination at Citi.
