New Look may give private equity a hat-trick of bad news
Tomorrow there's a fair chance that private equity will be able to bear testament to the old saw that bad news comes in threes.
Because I would put a reasonable wager that the board of the substantial retailer New Look - which is meeting then - will scrap its plans to begin its so-called roadshow for investment institutions that precedes a flotation.
Or to put it another way, the fashion group - like the leisure group Merlin and the travel services company Travelport - will feel obliged to delay its ambition to be listed on the stock market (although, to be fair to both New Look and Merlin, Travelport was the only one of the three that got right to the brink of listing before cancelling what would have been London's largest listing for a couple of years).
It wasn't supposed to be like this. Following last year's 50 per cent rise in stock markets, this was supposed to be the moment when private equity funds would be able to cash in some of those big investments made in the bubble years.
But it ain't happening.
So Permira and Apax will probably have to hold on to New Look for a bit longer than they would have wanted, just as Blackstone is retaining its ownership of Merlin and Travelport.
What's gone wrong?
Well it's not that there's anything intrinsically wrong with these businesses.
It's just that the big pension funds, insurers and other institutions that look after our money seem to have wised up that if private equity is selling, it isn't as an act of philanthropy.
Too many mainstream institutions have been bruised over the past decade by selling businesses to private equity too cheaply and then buying them back too expensively.
And they've worked out that for once they've got the private equity firms over a barrel - in that most companies owned by private equity are loaded to the gills with debt that needs to be refinanced in the coming months and years, in a new world where debt is no longer that cheap or easy to obtain.
If conditions in the debt markets don't improve for companies with substantial borrowings, the investment institutions know there's a fair chance that at some point the private-equity firms will be forced to sell them these companies at bargain-basement prices.
Now I am not remotely suggesting that the owners of New Look, Merlin or Travelport are or may become forced sellers.
For a pension fund with plenty of precious cash, it is probably worth a punt that they could become forced sellers in the coming months or years.
So if the private equity firms are trying to flog the businesses now, the rational response from a pension fund is to say: "we might buy shares in your businesses, but only if you slash the price".
Which, of course, the private equity firms don't wish to do, because that would kill their returns.
So the private equity firms are hanging on to their assets, in the hope that what's called the tone of markets improves over the coming months.
And if investment institutions don't regain their appetite for what private equity is selling, well we could see a lot of tearful private-equity partners (don't snigger - it's not becoming).