Private equity firms and their bankers are not trumping the latest study by the Australian Private Equity and Venture Capital Association, which shows private equity-backed initial public offerings beat other IPOs.
Over a three-year period, private equity-backed IPOs rose 78 per cent on average, said the report’s author Kar Mei Tang. Non-private equity IPOs fell 2 per cent. The study took place from October 2003 to November 2010 and includes 14 private equity-backed IPOs and 88 other IPOs of companies whose market value was at least $100 million.
“I’m not sure there is a fundamental difference between IPOs done by private equity and other IPOs,” said a senior banker. “I’m not sure you can say private equity IPOs are best.”
Peter Gold, partner at Sydney-based Archer Capital, said the firm had no preferences when it came time to sell its asset. Archer, a 15-year old buyout firm that has $2 billion in funds under management, has made more than 30 acquisitions including several that created the sports retailer Rebel Group.
“We’re open to all options with Rebel,” said Gold.
Katherine Woodthorpe, the Australian Private Equity and Venture Capital Association chief executive, said the Australian IPO market is hardly robust for private equity.
“There is gloom around the IPO market at present,” Woodthorpe said.
Trade sales typically outnumber IPOs by private equity, she said. Private equity can often get better prices for businesses sold to larger companies seeking to add a smaller firm to their portfolio, Woodthorpe said.