Buyout firms hardly rushing to IPO market

By Michael Flaherty

NEW YORK (Reuters) - While private equity firms were spurred early this year to explore plans for public offerings, major buyout shops don't appear to be rushing to the IPO market.

Top managers from Thomas H. Lee Partners THL.UL and Bain Capital, who attended this week's Reuters Hedge Funds and Private Equity Summit, said while the idea of a public vehicle was interesting, they are not pursuing any plans right now.

"We're not actively looking at it, but we're always open minded," said Paul Edgerley, a managing director at Bain, a major private equity firm currently investing $10 billion globally.

"From my standpoint, being public is a complicated thing. It's got its positives and its negatives. You're going to have public reporting which I think is going to create disincentives sometimes," Edgerley said.

Private equity firms buy controlling stakes in companies, restructure the businesses, and typically sell them two to four years later, keeping 20 percent of the profits, or "carry", and giving the rest back to their investors.

Asked if public equity would help attract and retain talent at private buyout firms, Edgerley said "not really."

"We can get great talent," he said. "All people in private equity have good business models. The nature of how carry works really does give people something similar to equity in any firm. I don't think you have to go public to do that."

Buyout firms raise money by going out to pension funds and endowments and asking for allocations. But they have long aimed to avoid that lengthy and costly process, and in the last few years a few funds have found ways to raise public money.  Continued...