Merlin Entertainments heads for ride on London stock market - The Guardian

Theme park operator Merlin Entertainments is heading for London's biggest stock market listing since the financial crisis began, with its chief executive claiming investors have overcome their "suspicion" of private equity owned businesses.

Merlin – which operates Alton Towers as well as the London Eye, Warwick Castle and Blackpool Tower – is currently owned by buyout firms Blackstone and CVC, and the family behind Lego Group. The group is hoping to raise more than £3bn from an initial public offering.

Chief executive Nick Varney, a former marketing manager at Alton Towers who has steered the company through 14 years of private equity ownership, was forced to pull a planned IPO in 2010 as the markets remained closed for business during the aftermath of the credit crunch.

"We got a very positive response to Merlin every time we went to see somebody but at that point there was still a shadow of suspicion stalking the markets and a little bit of mutual distrust between private equity and the big institutions," Varney said in a CNBC interview. "One of the big changes now is I think that's all dissipated and gone away. Institutions are recognising there are some really good companies out there that have been brought through by private equity and that will make great IPO candidates."

Institutions burned by investments in heavily geared companies such as telephone directories group Yell (now Hibu) steered clear of businesses being offloaded onto the public markets by private equity firms. Optimism has returned this year thanks to an extended rise in London shares and smooth stockmarket debuts for Countrywide, Esure and Crest Nicholson.

Merlin's headquarters are in the Dorset town of Poole, and its attractions also include Madame Tussauds, Legoland, the London Aquarium, Alton Towers and Thorpe Park. The group, many of whose assets were once owned by the media conglomerate Pearson, has bank debts of £1.2bn at the end of 2012 – 3.5 times its £346m underlying earnings.

Merlin is looking for four or five banks to handle its listing, which is expected at the end of this year or in the first three months of 2014. Varney said he was ready to move to public ownership in order to be able to make longer term investment decisions than are allowed under the three to four year private equity returns cycle.