Three Public Offerings Planned In Tough Market

August is traditionally a slow month for IPOs but that didn’t stop three portfolio companies from testing the waters last month.

Businesses backed by Kohlberg Kravis Roberts & Co., Silver Lake and The Walnut Group filed plans for IPOs, while a Madison Dearborn Partners-backed company is prepping a follow-on offering.

Cincinnati-based The Walnut Group intends to raise about $172.5 million in its offering for The O’Gara Group, a counterterrorism products and training company. Money raised in the offering is earmarked to fund a buying spree for the Cincinnati-based platform company, which makes homeland security-related sensor technology and vehicle security products. The O’Gara Group has already agreed to acquire a total of five companies—Finanziaria Industriale, Keystone Applied Technologies, OmniTech Partners, Optical Systems Technology and Transportadora de Protección y Seguridad—for a combinedl consideration of $232 million. Also funding the acquisitions would be cash from a $54.8 million credit facility.

The Walnut Group, which makes management-backed investments in privately held companies, purchased around 25 percent of The O’Gara Group in 2004.

KKR and Silver Lake chose a partial IPO as their exit plan for Avago Technologies, a fiber-optic and laser company the firms purchased for $2.6 billion in late 2005. Singapore- and California-based Avago Technologies was earlier a part of Agilent Technologies, a late-90s spinoff of Hewlett-Packard. The company, which makes analog chips, plans to raise $400 million in a Nasdaq listing in order to pay down debt and provide a partial exit for its LBO backers. KKR and Silver Lake have previously joined forces on semiconductor deals, including the $10.2 billion spinoff of Royal Philips Electronics’s semiconductor unit, announced in late 2005.

Meantime, Madison Dearborn Partners plans to cash in on its remaining stake in a company it took public through a special purpose acquisition corporation in 2006. The Chicago-based firm filed to sell its final 24.5 percent stake in portfolio company Great Lakes Dredge & Dock. After owning the company for three years, Madison Dearborn took it public with Aldabra Acquisition, a SPAC raised by private equity pros at Terrapin Partners.

The deal, valued at $160 million, provided partial liquidity on Madison Dearborn’s $362 million investment, $97 million of which was equity. In August of 2007, the firm cashed out again, reducing its stake in the marine construction and dredging services company to 24.5 percent. With the stock trading around $7.60 per share, Madison Dearborn’s final cash-out is worth around $107 million. The firm’s investment in Great Lakes Dredge & Dock returns money to its fourth fund, a $4 billion pool of capital.

Madison Dearborn’s exit of Great Lakes Dredge & Dock will mark the Oak Brook, Ill.-based company’s latest change of buyout firm hands. Prior to Madison Dearborn and Aldabra Acquisition, the company bounced from The Blackstone Group to Citigroup Venture Capital.

Overall, it hasn’t been a great year for buyout-backed public offerings. Since going public in June, shares in Apollo Management‘s Verso Paper Corp dropped from $12 each to a recent price of around $4.90. The offerings of Heritage-Crystal Clean, backed by Bruckman, Rosser Sherrill & Co., and RiskMetrics Group, backed by W Capital Partners, have remained relatively flat, and Kelso & Co.’s RHI Entertainment went public only after cutting its proposed offering price by several dollars per share.

The IPO market— buyout-backed or not — is so dry that the number of IPOs in the pipeline that were withdrawn has actually dropped because fewer companies are taking steps toward coming to market to begin with. Filings in 2008 are down roughly 75 percent from the pace at the same time last year.