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In the IPO departure lounge

Listing speculation continues and the last month has seen a wave of private-equity backed companies eagerly awaiting the recovery of the IPO market.

Advent-backed HMV Media, looking at a May float, hopes to be the first of many private equity exits through the public markets this year. HMV has kicked off its institutional roadshow by setting a price range of 190 pence to 220 pence for its flotation. This puts an enterprise value on the music and book retailer of GBP1.1 billion if it succeeds. Advent and EMI Group formed the joint venture in March 1998 investing GBP800 million. The transaction included the acquisition of Waterstone’s, the UK book seller from WH Smith for GBP300 million.

Also in the IPO departure lounge as evcj went to press is UK-based IT Services company, Detica. Candover backed the GBP12 million buyout of Detica, then known as The Smith Group in June 1997 and holds a 40 per cent stake in the company.

Swedish provider of specialised products and engineered solutions, Alfa Laval is also anticipating a flotation in the coming months. Following an IPO, the company’s two main owners Industri Kapital and Tetra Laval, the packaging company will reduce their holding to around 24 and 14 per cent respectively. The total offer size is around SKr7.6 billion, but could reach SKr9 billion depending on the final offer price. Should the IPO go through, it would be the Sweden’s largest listing since telecommunications operator Telia in June 2000.

Doughty Hanson is hoping for a July float with LM Glasfiber, the Danish manufacturer of wind turbine blades. Doughty Hanson acquired LM Glasfiber in March last year for an undisclosed sum and following a listing will reduce its stake in the company to between 45 per cent and 52 per cent. Most of the proceeds from the float will go to the company and be used to reduce debt. The company expects to raise up to DKr2 billion and could be one of the largest Danish IPOs if it succeeds.

Permira is doing well with its investment in Homebase, rumoured to be looking for an IPO of around GBP1 billion later this year. The firm has also recently returned GBP240 million to investors due to better-than-expected results from Homebase since it was acquired for GBP750 million in March last year.

Another DIY player, Focus Wickes has announced plans to float on the London Stock Exchange by the end of the third quarter, potentially valuing the company at between GBP1.2 billion and GBP1.5 billion. The group is owned by Duke Street Capital, which holds a 55 per cent stake.

Also on the IPO timetable, market conditions permitting, is UK directories business Yell which was backed last June by Hicks Muse Tate & Furst and Apax Partners in a GBP2.1 billion buyout. Betting businesses William Hill and Coral Eurobet were both planning to go public this year and William Hill is rumoured to be in the running to acquire Coral, delaying its IPO until later this year should the acquisition go through. Coral, backed by Morgan Grenfell Private Equity cancelled its IPO last year due to difficult market conditions.

However, market conditions remain shaky according to a recent survey by PricewaterhouseCoopers showing a marked decline in the number of IPOs in the first quarter of 2002 compared to a year ago see story above.

Tom Troubridge, head of the London Capital Markets Group, said: “The first quarter of the year traditionally records a lull in IPO activity, this year the decline has been particularly marked, reflecting the climate of continued economic uncertainty.” However, he added that there are certainly signs of private-equity backed entities which are poised to take advantage of an upturn in market confidence.