Investor sees IPOs, not mergers, for LBO firms

By Jeffrey Goldfarb

LONDON (Reuters) - More public floats of private equity firms are likely in future, but mergers between them are unlikely in the view of the chairman of a major investment firm.

"There are two major industries run by highly intelligent people which seem to have no mergers at all: one is charity and the other is private equity," Nicholas Ferguson, chairman of SVG Capital (SVI.L: Quote, Profile, Research, Stock Buzz), said on Wednesday at the Reuters Hedge Fund and Private Equity Summit in London on Wednesday.

Though private equity firm 3i Group (III.L: Quote, Profile, Research, Stock Buzz) tried unsuccessfully to buy rival Electra Investment Trust in 1999, Ferguson said it would probably be a long while before a firm tried such a deal again.

"I think you've got to wait another generation, and as they expand into other areas, you could see it happening," said Ferguson, whose firm is private equity firm Permira's PERM.UL largest investor.

"Could you see them sell stakes like hedge funds have done? Yes, that could happen."

He also said some small, struggling buyout firms might try to merge, but "two weaks don't make a strong".

Ferguson does, however, expect to see a wave of public flotations of private equity firms following Blackstone Group's BG.UL closely watched IPO.

"I think it will become the norm," he said.  Continued...