With the Dow Jones Industrial Average closing above the 15,000 level for the first time Tuesday, could market euphoria keep open the window for initial public offerings?
That seems to be the pattern following news that private equity firms TPG Capital and Warburg Pincus were eyeing an IPO option as an exit strategy for Neiman Marcus Inc. Spokesmen for TPG and Warburg have declined comment.
Credit analysts, who have said an IPO for Neiman would be welcomed by the investor community, are saying that Bain Capital is also considering an IPO as an exit strategy for Burlington Coat Factory.
Burlington Coat was acquired in 2006 in a transaction valued at $2.06 billion. The retailer operates 500 stores. For the year ended Feb. 2, or fiscal 2012, the company’s adjusted earnings before interest, taxes, depreciation and amortization rose $2.1 million to $352.1 million, while net sales rose 7.2 percent to $4.13 billion. Fiscal 2012 consisted of 53 weeks. Comparable-store sales for the 52-week comps period rose 1.2 percent.
A spokesman for Bain could not be reached by press time.
It wasn’t clear if Bain would receive the same reception expected in connection with a Neiman’s IPO. One credit analyst said that Neiman’s is attractive to investors because it occupies the luxury space. Burlington at the other end is in the moderate channel, not always the most sexy of investor stories if one was to do a road show, this individual said. Another credit source said it depends on what investors are looking for at the time a company comes to market. This source believes that a Burlington IPO probably wouldn’t hit the market until after the one for Neiman’s is completed.
Bain can afford to wait. Credit analysts said Burlington’s stores are performing and factors are supporting the retailer. “It’s a well-run company right now,” another financial source said. The retail chain also recently refinanced its long-term debt, giving its owner a $300 million dividend, one credit source said.
Retailers aren’t the only ones contemplating an IPO strategy.
Executives at Vince, a division of Kellwood, which in turn is owned by private equity firm Sun Capital Partners, have been working on growing the brand, both on an accelerated basis and supposedly on strategies to maximize its potential as a global brand. There has been speculation since last fall that Sun is eyeing a partial spin-off of Vince in the form of an IPO.
Coty Inc. is also said to be rethinking its IPO plan. The beauty company, which had planned to raise $700 million for investors through an IPO in October, is believed to be eyeing that possibility now that Michele Scannavini has had some months under his belt as chief executive officer before facing Wall Street. He took over the post on Aug. 1 upon the retirement of Bernd Beetz.
There have been rumblings of a Coty IPO in the past few weeks, and The Financial Times reported Tuesday that the renewed efforts could come as early at next month. A successful IPO would provide an exit for the Benckiser Group.
A Coty spokeswoman declined comment.