Moving on to the next point on our list - IPOs of PE portfolio companies. Most of the cancellations we have seen have been the levered PE held firms – Travelport, Merlin Entertainment, New Look – which were looking at >1 billion flotations.

At the same time, there are planned IPOs of firms which have been able to demonstrate a growth story and the ability to continue with the growth.  For starters, there is the Apax portfolio firm Promethean, a maker of interactive white boards. According to the FT, the firm is looking at an IPO of £400 million which will value it at 18 times last year’s EBITDA. The firm has no debt and has shown growth of close to 60% over previous year’s profits. A few other floats expected are Emis and the Supergroup. Emis is a £50 million AIM listing for a firm with a turnover of £58 million last year and an operating profit of £15.8 million. Fortinet had a stellar IPO last year but then the firm was a market leader in the UTM space.

As of now, I haven’t come across any venture capital IPO exits but can only hope that VCs are also in discussions with bankers for some of their larger and more stable investments. The Amadeus investment, Icera, comes to mind.

But across the pond it’s a completely different story. There is a spate of VC exits and not all of them seem like the high growth or positive net income stories mentioned above. For some, forget growth, their target markets are themselves in such a flux that you can’t help but wonder what the impact on the firm will be (case in point – TeleNav, Motricity). Quite a few are in the red and they don’t seem to have the potential to turn positive anytime soon.  Some of the anticipated IPOs – the good, the bad and the ugly -:

• In the videogame rental space, Gamefly Inc, a Sequoia investment, is filing for a $50 million IPO in Feb. The company continued growth in spite of the recession with revenues of $47 mil each in Q2 and Q3 2009 compared to $39 mil in Q3 2008.
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• GlassHouse Technologies which provides storage consulting and services is filing for a $75mil IPO. The Company had over $72 mil invested by several investors. They, too, have continued with their growth (not that spectacular) - $65mil in 2009 compared to $62mil in 2008 (first three quarters)
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• MaxLinear, a wireless and wireline solution fables chipmaker, made $36 mil in revenues Q-Q3 2009 with $2.4mil in net income and is filing for a $100 mil IPO. Funds raised from VCs were approximately $35mil. They are playing against some well-established competitors but have proven themselves with a relatively decent customer base.
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• Telegent Systems, a provider of mobile TV chip solutions, is filing for a $250mil IPO. The Company’s 6 month revenues in 2009 were $111mil with $39 mil in net income. The firm has raised $50 mil in VC funding. Mobile TV was not the best of markets to be associated with over the last two years but they have established their own. But in a struggle between broadcast mobile TV and dedicated apps from TV channels, I do wonder who will win out. But that’s a subject in itself.
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• NewEgg Inc is an ecommerce company focused on IT products for small and mid-sized businesses and has filed for a $175 million IPO. The firm had revenues of $2.1B in 2008.
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• Broadview provides integrated communications and IP based services and has filed for a $287.5 million IPO. The firm has total VC investment of $300 million since 1997. Revenues in the 9 month sof 2009 have been $326mil with losses of around $46million.
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• Meru Networks, a wireless solution provider, with revenues of $32 mil in the first 9 months of 2009 but a net loss of $9 mil is filing for an $86mil IPO. The firm raised close to $160 mil from several VCs.
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• Calix Networks a provider of communications access system filed for a $100 mil IPO. The firm has revenues of $144 mil in the first nine months of 2009. But they are still in the negative with a net loss of $28 mil.
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• TeleNav which provides voice guided navigation services for mobile handsets is IPOing for $75mil. The firm has raised $35 mil from various VCs.
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• Motricity provides mobile marketplace management solutions and is filing for a $250 mil. The Company has raised over $365 mil from several investors. 2008 revenues were around $103mil with net losses. They appear to have a relatively concentrated customer base. Plus it would be interesting to see how this company rides the app store phenomena.
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• Vringo, a Warburg Pincus investment, provides video ringtone sharing solutions. This one is an interesting IPO because the firm has reported revenues of $36,000 for the first 9 months of 2009. Not exactly the size of an IPO. I would have expected the investors to keep it private a little longer.

I’m actually looking forward to seeing how the IPOs fare. As for the Europeans, are they just more risk averse or is the preference perhaps for trade sales. Let’s look at that tomorrow...