* CEO Gravenhorst says public offering is focus of efforts
* Sources say ISS has chosen 10 banks for IPO in early 2011
(Adds details, quotes, background, byline)
By Peter Levring
COPENHAGEN, Nov 19 (Reuters) - The head of Danish cleaning group ISS said on Friday the company aims to carry out an initial public offering (IPO) of stock, despite a report that private equity firms are preparing buyout bids.
On Thursday, sources familiar with the matter told Reuters several private equity funds were readying bids for the $7 billion company before a deadline next week.
The owners of ISS -- Goldman Sachs Capital Partners and Sweden's EQT -- have been exploring an IPO or a sale.
"What the strategic review aims at is an IPO," ISS Chief Executive Jeff Gravenhorst told Reuters. "That's what we remain focused on and what our efforts go into."
Gravenhorst also said ISS, one of the world's largest facilities management companies, expects to deliver more volume growth to its future owners and better margins in emerging and mature markets.
Separately, sources close to the deal told Reuters that ISS has appointed a syndicate of 10 banks to handle a possible listing on the Copenhagen stock exchange early next year.
"They've appointed Citibank, HSBC, Deutsche Bank and Nordea as joint bookrunners, while SEB, Danske Bank, Carnegie and UBS have been picked as co-leads on an initial public offering," a source close to the matter said.
Other sources confirmed that banks had been picked after a "beauty contest" during the summer, but added that no firm decision had been made about whether to opt for an IPO or a secondary buyout.
Gravenhorst declined to comment on the list of banks.
GROWTH IN OUTSOURCING
ISS has a workforce of more than 500,000, making it one of the world's biggest private sector employers, cleaning offices, cooking school meals and guarding buildings in more than 50 countries.
It sees a growing business as Europeans and Americans in particular face tough choices slashing budgets and trying to save by outsourcing services.
"We can offer public services 10-20 percent below current costs (in public sectors) if contracts have never been outsourced before," Gravenhorst said.
Jyske Bank said a peer group valuation would put a market value of 45 billion Danish crowns ($8.43 billion) on ISS, but that its ability to handle large facilities and global contracts should price the company at 47 to 49 billion.
"Following recent succesful IPOs, no doubt investor interest for an ISS IPO will be very big and push pricing higher," Jyske Bank analyst Martin Hansen said.
In 2005, ISS was taken off the Copenhagen bourse in a surprise move orchestrated by EQT after the Swedish fund lost a bidding war for Danish telecom TDC to a British-American consortium of funds Apax Partners, Blackstone Group, Kohlberg Kravis Roberts, Permira Advisers and Providence Equity Partners.
TDC is being readied for a December off-load of shares that could raise $3 billion for the five funds, following a recent wave of private funds seeking to exit their investments by flotations on the Copenhagen bourse. (Editing by David Cowell)
($1=5.337 Danish crowns)