News that private equity has pulled another attempt to take the money and run from a poorly performing retailer again causes us to ask, just where is the added value from private equity?

Archer Capital, a local private equity group, has been forced to “slow” the float of Rebel Group, which is essentially a sports and leisurewear business. According to media reports, Archer says it still plans to float Rebel, but not quite now.

Coming after the sharp earnings upgrade on Friday from the Commonwealth Bank and the generally healthy tone to the local market, Archer’s decision was a bit surprising. There were whispers that Rebel’s Christmas trading had not been strong, which were lumped into comments about “soft” conditions generally for the sector.

But that’s a bit of spin. The more likely explanation is that Rebel’s results didn’t justify the rich $800 million that Archer and its investors were looking for, so rather than be humiliated publicly by having the float price savaged, or the deal fail, Archer has pulled the deal for the time being.

It’s not that there hasn’t been a guide for Archer Capital to look at. The best current examples of the essential flaws in the private equity model remains the post-float market performance of Myer and Kathmandu, the two high-profile retailers to have floated in 2009 after being gussied up by the “experts” in the local and international private equity industry.

Since their floats last year, both have performed terribly. Myer hasn’t even traded at its $4.10 issue price, closing at $3.55 yesterday. Kathmandu floated at $1.70, hovered around there for a couple of weeks, then swooned lower and closed at $1.61 yesterday.

Then there’s those near-death experiences: Pacific Brands, Repco and Boart Longyear, which have all been through the private equity model, and nearly failed under the debt and flawed business model. In fact, Repco is the hands of private equity at the moment after its shares faded. Boart Longyear and Pacific Brands were saved by recapitalisations from the market in 2009.

Luxury boat maker Riviera and Australian Discount Retail were two companies owned by private equity operators, which went into receivership last year. Australian Discount has been broken up and sold off.

In all these cases the private equity groups took their money and ran, leaving it to super funds and individual investors to provide the necessary hundreds of millions of dollars last year to keep both companies afloat, or investors in the private equity funds to take the losses. The equity groups still got their fees and other payments.

They all went through the familiar process: costs cut, lots of debt, which increased the leverage (and returns to private equity and their investors) and then floated on the ASX at high earnings multiples in the issue price, then crashing as the credit crunch and recession added to the burden of all that debt.

The media reports yesterday suggested that Archer’s claimed $800 million valuation of Rebel might have been a bit high. A bit greedy more likely; seeing the group has reported sales of about $670 million, trying to take more out of the market than the revenue of the business being flogged, does seem a bit too much.

Archer has been pushing towards a float (or refloat, it bought Rebel more than two years ago when it was still listed, but controlled by Gerry Harvey’s Harvey Norman), since last November as it hoped to catch the wave that it thought the IPOs of Myer and Kathmandu would create. No deal.

Part of the justification in some articles was the “poor” Christmas sales that some chains are supposed to have had. After the surprise 1.4% jump in November’s retail sales, anything slower would be “disappointing” to some.

But the decision smacks of nervousness at Archer at the way the Myer and Kathmandu floats have been mauled.

There have also been some anonymous comments from fund managers about the richness of the Myer pricing and these have no doubt been repeated to Archer and its advisers.

Archer has form in privatising and then refloating dud retailers. It was involved in the 2001 privatisation of Repco, the automotive parts and supplies group (with Macquarie), which was solid in 2003 at $2.65 a share and privatised a second time in 2006 by another group at $1.75 a share after underperforming..

Now there’s talk Archer’s decision could delay other IPOs planned for the retail sector, such as Pacific Equity Partners’ REDGroup Retail, which owns Australia’s two largest bookshop chains, Borders and Angus & Robertson.

Books are hardly flavour of the month with many investors with all the talk about e-readers, digital books, smart phones being given the capability to be e-readers and other new tech developments in this area.

So that is hardly going to ignite investor demand.

After the stumbling post-float performances of Myer and Kathmandu, it’s a wonder any investor or fund manager would listen to private equity groups trying to flog their indebted charges. But fees must be made by the fund managers (from super fund investors) and the whole process is really a pea and thimble game.

The private equity owners of Myer, led by TPG, ripped out more than $1 billion in profit and then ran overseas with the money with the befuddled Tax Department in belated pursuit. But TPG and Macquarie Bank (plus others, including the then management) almost got control of Qantas just before the crunch hit in mid-2007. That would have been a fate worse than death for Qantas and its employees.

To come from private equity we have plans to refloat PBL Media and the Seven Media Group in the next year. That will be heroic. Private equity’s deft touch has destroyed value (with the willing support of Kerry Stokes and James Packer, the former owners or full owners), thanks mostly to the impossibly large levels of debt added to the companies.