PE-Backed IPOs Become Even More Scarce In Q3 –

If the private equity-backed IPO window was closed during the first two quarters of 2002, over the past three months it’s been nailed down, painted over and boarded shut.

Just three private-equity-backed companies managed to price between July and September, which marks the lowest combined IPO tally since the second quarter of 1978. Moreover, the pipeline has dried up as the third quarter’s six new private equity-backed filings were no match for the 14 private equity-backed companies that either pulled or postponed expected offerings.

“It’s a situation where you need to find someone to acquire your portfolio companies or else you’re going to have to keep holding on to them,” said an investor in a company that withdrew its S-1 filing last quarter. “It’s not an overstatement to say that the public markets are inaccessible.”

The third quarter’s only venture-backed IPO was a $30 million offering from HealtheTech, which had previously raised approximately $70 million worth of private funding from Berringea, New England Partners, Palm Ventures and Proctor & Gamble Co. The Golden, Colo.-based health monitoring device maker priced 4 million shares on July 12, at $7.50 a pop.

The other two private equity-backed IPOs in Q3 2002 came from companies with buyout backing. The first was a $90 million offering on July 11 from Kirkland’s Inc., a Jackson, Tenn.-based decor realtor which had originally hoped to go public in 1998. Kirkland’s is a portfolio company of Advent International, which sold approximately $3 million of its $100 million position via the IPO (38% pre-IPO, 32.3% post-IPO). The other buyout-backed offering was a $60.45 million IPO on July 18 from Red Robin Gourmet Burgers Inc. The Greenwood, Colo.-based restaurant chain operator received buyout backing in 2000 from Quad-C Partners.

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