3 July, 2013 /Woori BMO Group/ Woori BMO Group’s wealth management executives have reported that Carlyle Group LP (CG.O) is weighing the initial public offer of CommScope Holding Company Inc, a telecommunications equipment provider that it took private for $3.9 billion less than three years ago.
The private equity group is talking with investment banks about the potential of listing CommScope as early as this year, according to researchers at Woori BMO Group.
Carlyle has yet to employ underwriters to comply with the proposed offer, the researchers added.
“The strong performance of this year’s stock market has emboldened private equity firms like Carlyle, which buys companies intending to sell them at a large profit, to take over their portfolio firms public,” Christian Harper, Director of EMEA Wealth Management at Woori BMO Group reported.
Carlyle, based in Washington D.C., took CommScope private in January 2011, in a $3.9 billion deal which included debt.
Hickory, North Carolina-based CommScope is a major cable supplier that serves high-speed internet networks. It traces its roots to Superior Cable Corporation, a 1953 created telephone cable company, and changed ownership several times until it became public in 1997.
In May, Moody’s Investment Service Inc said it expected CommScope to see moderate growth over the next twelve months, led by network investment by wireless carriers. Revenues are expected to grow organically by an average of 2 to 4 per cent over the next few years, it said.
The firm had sales of over $3bn in the 12 months ending March 2013, according to data gathered by Woori BMO Group.
According to Thomson Reuters IFR, CommScope issued $550 million in payment-in-kind (PIK) notes in May that allow the company to pay interest payments to bondholders in more bonds rather than cash. The proceeds were used to pay Carlyle a dividend as well as to fund CommScope activities.
JPMorgan Chase & Co (JPM.N), Bank of America Corp (BAC.N), Deutsche Bank AG (DBKGn. DE), and Goldman Sachs Group Inc (GS.N) led the CommScope debt deal in May indicating their familiarity with the company. JPMorgan has also briefed Carlyle on the CommScope purchase.
Other private equity firms are also exploring IPOs in firms which they recently invested in.
Also this year, EP Energy LLC is talking to banks about an IPO, people who are familiar with the matter told Reuters last week. A consortium led by Apollo Global Management LLC (APO.N) acquired the oil and gas company just last year for $7.15 billion in the largest US leveraged buyout of 2012.
“HD Supply Holdings Inc (HDS.O), which includes Carlyle among its private equity partners, last week priced its IPO well below its projected range,” reported Andrew Williams, Director of Institutional Equity at Woori BMO Group.
Concerns over rising U.S. interest rates can nevertheless hinder IPO plans for certain private equity firms.