Pipeline producer Kinder Morgan Inc, backed by the Carlyle Group, turned in the paperwork for an initial public offering worth some 1.5 billion dollars to US regulators on Tuesday. The company is now privately owned after its management invested 14.6 billion dollars in its takeover back in 2007.
Company representatives said that, during the IPO, all common stocks will be sold by current investors, which include afore mentioned Carlyle, Goldman Sachs, Riverstone Holdings and Highstar Capital. Furthemore, the pipeline company will not receive any profits from the IPO.
Kinder Morgan is yet another IPO to be initiated by a Carlyle-backed company in a string of similar initiatives. A little while back, Booz Allen Hamilton, a company offering government consulting services, started making moves to go public.
Private equity companies seem to be increasingly interested in IPOs as of late last year, while before that the crisis has shut the doors for public listing. After takeovers done in the last decade, private equity companies, such as the Carlyle Group, are looking to sell the many companies in their portfolios and to do that with good profits.
Nevertheless, the market appears to remain tricky. A recent example is Harrah’s Entertainment Inc, which managed to raise an offering of 500 million dollars. Despite such an outcome being expected, the company might have fared better were it not for what they perceived as difficult market conditions.
This perception may not be entirely off-base. Some already filed IPOs, also backed by private equity funds, such as Toys R Us Inc, might sit on the sidelines until 2011.
Such behavior might also be prompted by investors’ critical view of private-equity backed firms, which usually have higher debts.
