Buyouts to Produce Big IPOs in 2007; Global IPOs Surpass $250B in 2006

Corporate buyouts by private-equity firms in the U.S. has been on a steady rise during the past several years, with record setting deals in 2006. This could set up 2007 and beyond for some megasize IPO activity as these new owners look to exit from their investments,  reports WSJ.

In 2006, US regained the No.1 status from Europe as the world's most active private equity market, with $403 billion of announced deals, three times that of 2005.

IPO seem to be most logical exit for the multi-billion dollar private equity buyout deals like Freescale Semiconductor Inc., HCA Inc., and Equity Office Properties Trust:  

  • In 2006, private-equity-backed IPO deals outperformed their private counterparts, with the average first day close of private-equity-sponsored IPOs in 2006 at 12%, compared with 10% for all other types, according to data from Dealogic.

  • In 2006, there were a half-dozen companies that raised more than $1 billion each through IPOs, up from just one such offering in 2005; 

  • Half of last year's six megadeals were private-equity-backed.

Meanwhile, the value of companies taken private reached record levels in 2006, with New York and London's stock markets taking the brunt of the $150 billion of de-equitisation, according to figures from Thomson Financial,  reports The New York Stock Exchange saw a net withdrawal of listed capital of $38.8 billion, while Nasdaq suffered a net withdrawal of $11 billion. 

Initial public offerings of US companies at $41 billion were less than half the nearly $97 billion of so-called public-to-privates where listed companies are bought out by private equity investors.

Global IPO value topped $253 billion by late December in 2006, companies in China and Russia responsible for $65 billion worth of IPOs, according to Thomson Financial research. 

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