Charterhouse Finds Opening for IPO –

New York-based private equity firm Charterhouse Group International last month was reminded of why its areas of interest include health-care staffing. With the initial public offering of Cross Country Staffing Inc., the firm is one of the relatively few buyout groups that has been able to take a portfolio company public this year.

Cross Country is the largest provider of health-care staffing services based on revenue, which is approaching $368 million. Charterhouse bought Cross Country in August 1999 for an undisclosed value (though sources close to the deal said at the time that it was over $150 million). Deutsche Banc Alex. Brown, now DB Capital Partners, provided $20 million of the $30 million mezzanine tranche. Northwestern Mutual picked up the balance.

Cross Country, which now trades on the Nasdaq under the symbol CCRN, offered 7,812,500 shares of its common stock to the public on Oct. 25. Shares of Cross Country’s stock priced at $17.00 a piece, the top end of the proposed offer price, which was $15.00 to $17.00. On the first day shares opened at $18.75 and closed at $20.07.

Merrill Lynch & Co. served as the book runner for the offering, while Salomon Smith Barney was the co-lead manager. Banc of America Securities LLC, SunTrust Robinson-Humphrey and CIBC World Markets were co-managers. Net proceeds for the offering were approximately$122 million.

“We’re obviously very happy with the way Charterhouse has managed the company and grown the company over time,” said Gregory Margolies, co-head of DB Capital Mezzanine. “This has been a great opportunity for us to do a good turn to Charterhouse and at the same time benefit our limited partners, which is the bank.”

Not too surprisingly, in its first three weeks as a public company, Cross Country has jumped its price up to $23.90 per share. The health-care sector is one of the few that earns high expectations from private equity players in the shadow of an economic recession. In the fall, 15 companies, including Cross Country, were waiting to price for an IPO more than any other sector. Three other health care-related companies, in addition to Cross Country, have priced since Oct. 25. Three more companies related to health care have filed to go public since Oct 18.

“Health care seems to be one of the few sectors that is being favorably received in the capital markets today,” said Margolies. “And [Cross Country] is a high quality company with a good management team and, obviously, with what we believe is a top-tier sponsor. That really differentiates a company in the capital markets today, and I think that’s one of the reasons this company was very successful in the IPO.”

Charterhouse did not return calls for this story.