LPL, Backed by Hellman and TPG, To Brave IPO Waters

It’s been months since LPL Investment Holdings, which is owned by Hellman & Friedman and TPG, initially filed for an IPO and now we have more information

First up, LPL is expected to price its IPO on Nov. 17 and will likely go public the next day, sources said. The Boston-based independent broker reduced the size of its planned offering this week to $515 million. In June, LPL initially filed to raise as much as $600 million.

It’s also important that LPL is even going public. The broker had been expected to sit in registration until the markets rebounded. The broad market did gain ground this week. Yesterday, the Dow Industrials closed at their highest level since the Lehman Brothers bankruptcy two year ago. However, one PE exec thinks it’s still not a good time to go public, since IPOs are shaky. “PE firms are anxious to show realizations generally,” the source said.

“PE investors want to get capital gains treatment this calendar year before taxes go up,” a banker said.

LPL, with its Nov. 3 regulatory filing, revealed the terms of its IPO. The broker plans to offer 15.6 million shares at $27 to $30 each via bookrunners Goldman Sachs and Morgan Stanley. Other underwriters on the deal include BofA Merrill Lynch, JP Morgan and seven other investment banks. The underwriters have the option to buy an additional 1.6 million shares, according to the regulatory filing. Including the greenshoe, LPL could sell about 17.2 million shares, which at $30 each brings the offering to roughly $515 million.

LPL is expected to trade on the Nasdaq under the ticker “LPLA.”

Hellman & Friedman and TPG acquired LPL in 2005 in a deal valued at $2.5 billion. LPL said in the filing that it will use the IPO proceeds to pay off debt, which stood at $1.4 billion as of Sept. 30.

Surprisingly, Hellman & Friedman and TPG are not selling shares in the IPO. The two PE firms own equal stakes, 36.3%, in LPL. Each firm currently has about 34.2 million shares. With the IPO, their stakes will be diluted to 31.5% (assuming the underwriters exercise the greenshoe).

The biggest individual seller is Mark Casaday, LPL’s chairman and CEO, who is selling about half of his stake. Casaday owns 3.9 million shares, or 4%, of LPL and is offering 1.9 million shares. His stake will fall to about 1.8 million shares, or 1.6%.

Goldman, which is a bookrunner for the LPL offering, is also selling shares. Goldman Sachs Mezzanine Partners owns about 3 million shares, or 3.2%, and is offering 1.9 million in the IPO. The firm’s stake will fall to roughly 1 million shares or 1%, after the IPO.