Party City planning 2014 IPO: report

Party City, the largest US party goods retailer acquired just over a year ago by buyout firm Thomas H. Lee Partners for $2.69 billion, is preparing for an initial public offering, according to people familiar with the matter.

Thomas H. Lee is working with banks including Goldman Sachs and Morgan Stanley on a plan that could see shares of the 800-unit chain begin trading publicly in the first half of 2014, those people said.

The full syndicate of underwriters has yet to be finalized so plans are fluid, according to the sources, who asked not to be identified because the discussions between Party City and the banks are confidential.

Thomas H. Lee, Goldman Sachs and Morgan Stanley declined to comment while Party City did not respond to requests for comment.

Party City sells party supplies, decorations and costumes, mainly under its namesake brand and the Halloween City, Factory Card & Party Outlet and Party Packagers names.

It had 12-month revenues in the year ended June 30 topped $1.9 billion, according to Moody's.

The IPO market has been strong in the last two months for consumer and retail related floats, including private equity-backed Burlington Stores and Container Stores.

In the summer of 2012, Thomas H. Lee acquired a majority stake in Rockaway, NJ-based Party City in a $2.69 billion deal from private equity peers Advent International, Berkshire Partners and Weston Presidio.

The offering would return more money to investors in the Boston-based private equity firm's latest fund, Thomas H. Lee Equity Partners VI. That fund raised $8.1 billion in 2007 and was valued at just 1.2 times its investors' money as of the end of March, according to the California Public Employees' Retirement System, an investor.

Thomas H. Lee invested $584 million as equity in Party City and has so far recouped about 40 percent of that through dividend recapitalizations, credit rating research notes show.

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