LPL Investment Holdings Inc., a company that supports some 16,000 independent U.S. brokers and financial advisers, raised $469.7 million in its initial public offering, giving the little-known brokerage firm a market value of more than $3.2 billion, according to Reuters, the publisher of Buyouts.
Underwriters said LPL sold 15.7 million shares for $30 a share, compared with its plans to sell 15.6 million shares in the range of $27 to $30 a share. The company has grown rapidly since buyout firms
Boston-based LPL, formerly known as Linsco/Private Ledger, is an unusual company in wealth management in that it does not employ brokers. Rather it sells clearing, custody and other services to thousands of self-employed independent advisers.
LPL said it may realize net proceeds of $35.4 million if the deal is over-subscribed and underwriter purchase their “greenshoe” shares. These proceeds would help reduce term loans under senior secured credit facilities.
LPL shares rose as much as 11 percent in their stock market debut, hitting $33.84 before easing back to close up 7 percent at $32.15 on the first day of trading.
The offering came amid the frenzy surrounding the record $22.7 billion General Motors Co. IPO and a day after
Booz shares surged 13 percent in its New York Stock Exchange debut, suggesting the market is again embracing private equity-backed issues.
One of LPL’s top advisers sold two-thirds of his LPL shares as part of the company’s initial public offering, and invested the proceeds in other companies.
Ron Carson, who is based in Omaha, Nebraska, told Reuters that he sold $2 million of LPL stock in the IPO. He retained about $1 million of the shares, which soared 11 percent in their debut on the Nasdaq on Thursday.
He said he invested the majority of his proceeds in the shares of companies including Monsanto Co., Verizon Communications Inc. and medical device-maker Medtronic Inc.
“They all fit with my theme of focusing on what the world needs, versus what the world wants,” said Carson, ranked as one of the nation’s top 10 financial advisers by Barron’s magazine.
Carson said he is happy holding the rest of his LPL shares for the long term, and sold the majority only because he was concerned about being too exposed to one company.
Carson criticized the IPO filing in June, but on Thursday he acknowledged that it was a success. “People weren’t sure if they could pull it off, but they did,” said Carson. “It’s a testament to our model and the record growth we are experiencing.”
A wave of brokers fleeing big Wall Street banks after the financial crisis helped fuel growth in LPL’s adviser ranks and its earnings for the past five years. Yet growth slowed in recent months, as worries about economic weakness and the May flash crash weighed on the markets.
The flow of advisers seeking independence also slowed, reflected in weaker recruiting results.
Joseph A. Giannone is a Reuters correspondent in New York. Jonathan Spicer and Helen Kearney also contributed to this report.