Booz Allen Hamilton Holding Corp. closed its first day of trading on the New York Stock Exchange at $19.25, 13.2 percent higher than its IPO price on Wednesday, Reuters said. The McLean, Virginia-based government consulting firm is majority owned by The Carlyle Group of Washington, D.C. Booz Allen Hamilton raised about $238 million through the sale of 14 million shares for $17 each. It had planned to sell shares in the range of $17 and $19 each.
(Reuters) – Shares of government consulting firm Booz Allen Hamilton Holding Corp (BAH.N: Quote, Profile, Research, Stock Buzz) closed its first day of trading 13.2 percent above their initial public offering price on Wednesday, signaling a possible uptick in investor interest in private equity-backed new issues.
Shares in the company, majority owned by private equity firm Carlyle Group [CYL.UL], rose in debut to close at $19.25, above their $17 IPO price, on the New York Stock Exchange.
The window for private equity IPO exits was shut during the financial crisis but cracked open late last year. Private equity firms have a large number of companies to sell in coming years as they look to profit from buyouts done during the boom years of last decade.
But Richard Truesdell, co-head of the global capital markets group at law firm Davis Polk & Wardwell LLP, warned that the Booz Allen debut on the stock market may not translate into further interest in private equity-backed shares.
“We have had high volatility for a couple of months now,” he said. “There have been good weeks and bad weeks, and this week everyone is more optimistic.”
Booz Allen Hamilton sold 14 million shares for $17 each, raising about $238 million, according to an underwriter. It had planned to sell 14 million shares for between $17 and $19 each.
The McLean, Virginia-based company provides management and technology consulting services to the U.S. government in the defense, intelligence and civil markets. It said it would use proceeds from the IPO to repay debt.
Washington, D.C.-based Carlyle, which has more than $90.9 billion under management, bought a majority stake in Booz Allen Hamilton in 2008 for $2.54 billion.
In the six months ended Sept. 30, Booz Allen Hamilton posted revenue of $2.7 billion, up 8 percent from the same period a year earlier. It reported net income of about $43 million, up 123.5 percent.
Booz Allen Hamilton’s IPO is one of a handful of offerings this week that will serve as a litmus test for the broader health of the U.S. IPO market.
Also on deck are U.S. automaker General Motors Co [GM.UL]; Chinese auto-themed website Bitauto Holdings; LPL Investment Holdings Inc, parent of one the largest U.S. brokerage companies; wireless communications parts maker Aeroflex Holding Corp; and casino operator Caesars Entertainment.
Several of the offerings are backed by private equity firms.
Underwriters on the Booz Allen Hamilton IPO were led by Morgan Stanley and Barclays Capital. The shares were trading on the New York Stock Exchange on Wednesday under the symbol “BAH.”
(Reporting by Clare Baldwin and Soyoung Kim; additional reporting by Megan Davies and Alina Selyukh; editing by John Wallace, Phil Berlowitz)