Onex plans an initial public offering from its stable of private companies, and the IPO candidate is not one of holdings the Canadian private equity pioneer was expected to sell.
Tube City IMS, a Pittsburg-based company that services steel makers (and doesn't actually make tubes) filed the paperwork for an IPO on a U.S. exchange. BofA Merrill Lynch, Credit Suisse and J.P. Morgan are leading the offering.
Onex bought Tube City early in 2007 - a year when buyouts were coming fast and furious - for $249-million (U.S.), with the Toronto-based compeny putting up $98-million from its second Onex Partners fund. Tube City has not indicated how much money it will raise in the stock sale.
Onex hinting over the past six months that was ready to sell stakes in at least two companies that it controls, and analysts were expecting offerings from portfolio companies Husky Injection Moulding Systems and The Warranty Group, both of which are said to be strong performers.
A successful offering from Tube City would be a positive move for Onex, according to analyst Peter Sklar at BMO Nesbitt Burns. He said in a report on Thursday: "The IPO of an investee company within one of the funds would be a positive development as it would move forward the process of monetizing assets within the fund thereby providing Onex with the opportunity to realize returns on its invested capital, and to earn additional fees as a result of its carried interest on the returns realized by the limited partners."
In 2006, prior to be acquired by Onex from another private equity fund, Tube City attempted to raise $172.5 million by doing an IPO and listing Nasdaq, but opted to pull the offering. The 85-year-old company was family-controlled for most of its history.