New Look gears up for fresh IPO bid
Private equity-owned retailer could launch flotation as early as June after postponing last month
Monday 22 March 2010
The fashion retailer New Look could resurrect its £1.7bn flotation plans this week when its board meets to consider if market conditions have improved sufficiently since the deal was postponed last month.
Executives at the group, owned by private equity firms Apax and Premira, are set to meet on Tuesday to consider the move. Any listing could come as early as June, just five months after the IPO failed to gain traction with investors for a second time in three years.
The deal was pulled, along with those for the ticketing business Travelport and Legoland owner Merlin Entertainments, after only lukewarm support from investors. Since the plans were shelved, some deals have been successful, giving the New Look's owners renewed confidence.
New Look shelved its planned IPO blaming volatile markets. The group, which has debts of £1.1bn stemming from its leveraged buyout, insisted that decision was a postponement rather than a cancellation. Similarly, Travelport and Merlin, which are also heavily indebted after private equity buyouts, respectively shelved £1.2bn and £2bn listing plans.
The successful deals include last week's flotation for African Barrick Gold, the African arm of the world's biggest gold producer, which raised about £575m in London. Educational software company Promethean World got its IPO away two weeks ago, and encouragingly for New Look, so did the the fashion retailer Super Group.
John Hammond, capital markets partner at Deloitte, said the floats confirmed "the talk of the capital markets being open", adding that it "opens up the prospect of further IPOs in the immediate pipeline".
Others have been more wary about the market's ability to digest big deals, and especially those from companies that are heavily indebted. Some analysts believe investors are being selective, picking only those that are perceived to be low-risk transactions.
Thierry Monjauze, head of Europe for Harris Williams, a middle-market M&A adviser, said: "Even in a market where IPOs are regularly getting pulled and the market window appears to be narrowing, companies that are market leaders with demonstrated revenue growth and strong cashflow generation characteristics should perform well in the after-market and attract strong institutional demand. But average companies will find it more challenging."
Edmund Shing, an equity strategist at Barclays Capital, said: "Investors are still nervous and therefore much more focused on a company's individual merits."
New Look has performed well for Apax and Permira since the two buyout firms took it private in 2004. It has more than 1,000 stores in the UK, Europe and the Middle East. The owners have made back their initial investment after refinancing of the company's debt, and the group is said to be performing ahead of expectations after a strong Christmas trading period.
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