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Private-equity giants Bain Capital and KKR have been making headlines in recent months as the sponsors behind several well-known companies planning large public offerings, one of which, Toys "R" Us (TOYS), filed just this morning. Though many PE-backed IPOs have been met with skepticism this year with investors lowering their risk appetite in the current volatile market environment and pushing back on valuations, three high-profile deals recently added to the IPO pipeline have the potential to buck the trend.

The two PE firms, along with NY-based REIT Vornado Realty Trust, bought Toys "R" Us in 2005 for $6.6 billion ($7.7 billion including debt) and plan to bring it back to the public market in an $800 million listing on the NYSE. The specialty retailer booked $304 million in earnings on $13.6 billion in sales last year and plans to use IPO proceeds to pay off part of its $5.6 billion in debt. At the proposed amount, the Toys "R" Us deal would be the largest retail IPO in at least 15 years, beating out Dollar General's (NYSE:DG) $716 million offering last November (the discount retailer was also owned by KKR and is up 46% from its IPO price of $21 per share). IPO investors may be attracted to Toys "R" Us' turnaround story: since it was taken private, it has hired new executives who have acquired competitors such as FAO Schwarz and worked to streamline its business, integrate its Toys "R" Us and Babies "R" Us brands, build its online platform and increase flexibility by opening temporary store locations during the holiday season.

The announcement by the toy company comes only three weeks after an S-1 submission by HCA (NYSE:HCA), the leading private hospital operator in the US that is expected to be the largest private-equity backed IPO in history. The company, founded by the Frist family in 1968, was publicly traded between 1992 and 2006, when it was acquired by a PE consortium led by Bain and KKR for $32 billion. Since then, the company's top line has grown 18% to $30 billion, and it now operates 162 hospitals in 20 states across the country. KKR and Bain each own a 25% stake and plan a $4.6 billion listing on the NYSE to help pay off its $27 billion current debt burden.

NXP (NYSE:NXP), a Netherlands-based global semiconductor company that designs products for auto, industrial and mobile industries, is a third high-profile Bain and KKR-backed IPO that filed in mid-April. The former subsidiary of Philips Electronics, which filed with the SEC under the name KASLION Acquisition B.V., plans to raise $1.2 billion in its IPO. NXP, which booked a loss of -$161 million on $3.8 billion in sales last year, hopes to take advantage of the recent successes and positive earnings posted by semiconductor companies, which have sent chip stocks surging over the past 12 months.

Private equity-backed IPOs have struggled recently in comparison with the broader IPO market. Over the last 90 days, 12 PE-backed deals have raised $2.4 billion in IPO proceeds and posted a disappointing average return of -6%. During the same period, 26 IPOs (excluding PE-backed deals) raised $3.1 billion and traded flat on average, outperforming the S&P, which was down -4%. Though investors have historically been reluctant to buy from PE sponsors who made sizeable purchases before the economic downturn and are now trying to monetize their investments and pay off huge sums of debt, the buzz surrounding Toys "R" Us, HCA and NXP could be enough to reverse the trend. Strong performance by these highly anticipated deals could offer some relief for the IPO market, which has cooled off in the last month as the general economy suffered from euro-zone fears, rising jobless claims and financial regulatory reform legislation.

Source: Toys R Us Joins List of Bain, KKR-Backed Deals in IPO Pipeline