UPDATE 1-Australia's Ausco planning IPO, first PE float in 18 months

* Ausco seen leveraged to mining boom with possible A$500 mln float

* IPO issuance in Q1 was paltry at $21.5 mln- Thomson Reuters data

* Some private equity owners happy to wait for better conditions (Adds details, background)

By Victoria Thieberger

MELBOURNE, April 12 (Reuters) - Australian private-equity owned building company Ausco Ltd is planning a A$500 million ($520 million) initial public offering, according to several fund managers, in what would be the first float by a buyout firm in the local market in 18 months.

The IPO market has been virtually shut for private equity firms since the disappointing float of department store Myer , which listed in November 2009 and has yet to trade above its offer price.

But two fund managers who have seen premarketing documents for Ausco -- owned by Waco International, a South-African based industrial services company bought by CCMP Capital in 2006 -- said its links with the resources boom could see a better reception to a potential float.

Ausco produces and hires out modular buildings for the mining and construction industries, government and schools.

The fund managers spoke on condition of anonymity because they were not authorised to speak the media. One said a prospectus could be lodged next month.

Advisers UBS and JP Morgan, and Ausco were not immediately available for comment.

TESTING THE WATERS

Private equity industry sources said owners were taking baby steps on potential floats or trade sales.

"A lot of people are out there testing the market before starting a formal (sale) process. Normally vendors are much more confident that there is the appetite," said one person who was not authorised to speak with the press.

Last month, Australian cinema chain Hoyts said plans to float or sell this year were on hold due to market uncertainty, and owners Pacific Equity Partners (PEP) had no new timetable to exit the company.

Others said even though private equity firms are holding onto a large number of companies acquired in the 2006-07 boom years, few were under pressure to exit if conditions were not right.

"It's not that you can't do an IPO, it's just that we haven't had a meeting of minds between institutions and vendors yet this year," said UBS co-head of equity capital markets Andrew Stevens.

"It is fair to say that in some cases the current pricing expectations of the market don't quite meet vendors' price expectations  and many vendors are happy to wait for this dynamic to change."

An Ausco float could be followed to market by Barminco, an underground mining contractor which is 70 percent owned by Gresham Private Equity. Barminco has said it has begun a strategic review and is considering an IPO or trade sale.

An Ausco float would be the biggest IPO in the local market this year, with Thomson Reuters data showing that IPOs raised just A$21.5 million in the first quarter, down from A$90 million in the first quarter a year ago. (Reporting by Victoria Thieberger; Editing by Balazs Koranyi)