Private equity funds may still be reluctant to spend the huge cache of cash they raised a few years ago. Exhibit A: their record $400 billion in dry powder.
In the past month or two, many of them have taken advantage of the uneven recovery of the IPO market to cash out some of their holdings from earlier deals. In some cases, investors in the original deal have only agreed to sell their shares if the underwriter needs to meet additional demand. This includes wireless company Motricity, which plans to go public this week and counts Carl Icahn among its owners.
However, 11.6 million of the 42 million shares that oil producer Oasis Petroleum plans to sell this week will come from EnCap, a private equity firm that specializes in the oil and gas industry. Oasis is hoping to get between $13 and $15 per share in the IPO, which means EnCap could gross as much as $175 million in the offering.
EnCap has raised 14 institutional oil and gas investment funds totaling over $7 billion.
In May, before the IPO market briefly dried up, one-third of the 10 million shares offered by Accretive Health came from the selling stockholders. They included a private equity fund affiliated with Oak Hill Capital Partners, whose lead investor is Robert Bass.
The deal was completed at $12, or 20 percent below the midpoint of the $14 to $16 proposed range, according to Greenwich, CT-based Renaissance Capital, which noted the health care outsourcing firm had initially planned to offer 13.3 million shares. Since then, the stock is up more than 10 percent, so the new shareholders have also done well.
In May, transportation and logistics services provider Roadrunner Transportation Systems said 1.6 million of the 10.6 million shares sold in its initial public offering were sold by its stockholders. Most of those shares were sold by investor American Capital Entities, which is affiliated with American Capital, a buyout firm that has sponsored more than 123 transactions since inception.
The insiders have certainly fared better than the investors who bought into the IPO; the stock is down more than 1 percent since the offering.
Also in May, one third of the 10 million shares sold by Douglas Dynamics, the largest provider of snowplows and sand and salt spreaders in North America, came from the selling stockholders. About 1.65 million shares came from Aurora Entities, an affiliate of Los Angeles-based private equity firm Aurora Capital Group, while another 1.1 million shares came from Ares Corporate Opportunities Fund, L.P, affiliated with The Ares Private Equity Group, also based in L.A. Shares of Douglas are up 6.7 percent since the offering.
