KAR Holdings Inc., parent of the Carmel-based auto-auction firm Adesa Inc., has announced its intentions to become a publicly traded company.
KAR filed its registration statement for the initial public offering yesterday with the Securities and Exchange Commission and intends to list its stock on the New York Stock Exchange.
The number of shares to be offered and the price range for the IPO have not been determined, the company said.
Adesa had been a public company until a group of private investors acquired it in December 2006 for $3.7 billion and took it private. The buyers were Kelso & Co.; GS Capital Partners, an affiliate of Goldman Sachs; ValueAct Capital and Parthenon Capital.
It’s not unusual for private investors to take a company public again in an effort to get a return on their investment, said David Millard, chairman of the business department at Indianapolis-based law firm Barnes & Thornburg LLP.
“Your only chance of liquidity is a sale or a public offering,” he said. “As you go into the IPO process, you’re constantly weighing that.” New York-based Goldman Sachs & Co. is serving as the underwriter of KAR’s proposed IPO. Its timing depends upon several factors, including market conditions, the company said.
Calls to Adesa seeking comment on the proposed IPO were not returned this morning.
The market swoon that started last year already has prompted two area companies to put their aspirations of going public on hold.
ExactTarget had laid out plans in December 2007 for an $86 million offering to grow its e-mail marketing software business. Market conditions soured in 2008, leaving the offering in limbo. About the same time, Aprimo Inc., a maker of marketing software, unveiled plans for a $50 million IPO. It also pulled the offering last year because of poor market conditions and instead raised $15 million in a private offering.
If Adesa goes through with its IPO, it would be the first Indianapolis-area company to go public since HHGregg Inc. in 2007. Although signs of a market thaw are beginning to emerge, 2009 still has been a pretty anemic year for the U.S. IPO market. As of August, the value of U.S.-listed IPOs stood at about $5 billion—a far cry from the $30 billion of initial public offerings sold last year, according to New York-based data tracker Dealogic.
But the one bit of positive news has been the market for technology IPOs. Through August, nine technology companies have raised a combined $1.8 billion through initial public offerings—a 133-percent increase from last year, according to Dealogic.
Millard at Barnes & Thornburg agreed there are signs that the IPO market may be on the upswing.
“Very clearly the IPO window is either open or opening,” he said. “So I think we’re going to see a rash of IPOs, because there were a lot of companies that were preparing to go public before the market crashed.”
Adesa was founded in 1989 to auction trade-ins from car dealers and went public three years later. It was bought in 1995 by Minnesota Power & Light, which spun Adesa off into its own publicly traded company in 2004. Investors took the company private two years later.
Meanwhile, Adesa President James Hallett was fired in 2005 but returned as CEO of auction operations in 2007. Adesa’s 62 used-vehicle auction sites transport and recondition cars and handle the paperwork. Its 87 Automotive Finance Corp. outlets finance dealer purchases at auction. Its 152 Insurance Auto Auctions sites auction salvaged cars—typically wrecks that are purchased for their parts.
The operations employ 13,000 in North America, including more than 300 at the Carmel headquarters.