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* Ready to swap some upside for cash when firms floated

* Don’t see IPOs as clean exit

* Expect firms to hold more public stock in future

* See 2010 as benign environment for exits

By Simon Meads

PARIS, Nov 19 (Reuters) – Private equity investors are ready
to accept lower returns in exchange for getting some cash back
when buyout firms float some of their biggest companies in what
could be a crowded market for new issues next year.

As stock markets across Europe have stabilised, large buyout
houses have been preparing their best performing portfolio
companies for flotation, as other exit routes have been closed.

Companies being lined up for flotation next year include
Permira [PERM.UL] and Apax Partners’ budget fashion chain New
Look and BC Partners’ [BCPRT.UL] chemicals distribution business
Brenntag [BREHO.UL].

Initial public offerings (IPO) in Europe are expected to
pick up in 2010 after a very slow 2009, but some investors
attending the SuperInvestor private equity conference in Paris
were wary about how much cash they will receive.

“Every investor wants to see some signs of liquidity. Would
they trade a little bit of upside to get liquidity back? I think
the answer is probably yes,” said Tim Jones, partner at Coller
Capital, the world’s largest buyer of private equity fund
participations on the secondary market.

Buyout firms and their investors said next year could
provide a good chance to float companies, after investors have
been force-fed a raft of deeply discounted rights issues.

“Our sense is institutional investors do have money to
invest, are keen to look at new companies but are going to be
very discerning in deciding which companies they are going to
invest in and I’m sure they will be very demanding on value,”
said Andrew Newington, managing partner for BC Partners.

In addition to Brenntag, BC Partners has travel industry
technology provider Amadeus and French care homes operator
Medica slated for a listing next year, he said.

Permira is considering a share sale of part of its $7.4
billion holding at Danish telecoms giant TDC, which it co-owns
with Blackstone (BX.N), KKR [KKR.UL], Apax and Providence Equity
Partners.

But some believe the exit window could be short as concerns
around the performance of the real economy persist. Listings may
not offer a clean and definitive exit, either, as private equity
firms could have to retain more stock in floated firms than in
previous cycles, investors said.  Continued…