Carlyle's Booz Allen Raises $238 Million in U.S. Initial Public Offering

Booz Allen Hamilton Holding Corp., the government-consulting firm acquired by Carlyle Group in 2008, raised $238 million pricing its initial public offering at the low end of its forecast range. The shares advanced.

The McLean, Virginia-based company sold 14 million Class A shares at $17 each yesterday after offering them at $17 to $19 apiece, according to a filing with the Securities and Exchange Commission and a statement. Booz Allen climbed 13 percent to $19.25 in U.S. composite trading today.

Carlyle, the world’s second-largest private equity firm, took Booz Allen public in the biggest week for U.S. initial offerings since 2008 after the Standard & Poor’s 500 Index suffered its longest stretch of declines in three months. The IPO price still was more than three times the average paid by Carlyle and other existing owners, Bloomberg data show.

“Even at the low end, they got a pretty good valuation on this one,” said Scott Billeadeau, who helps oversee $18 billion at Fifth Third Asset Management in Minneapolis. “They did the right thing, they priced at the lower end, that’s what made it work.”

Booz Allen, which generates about 98 percent of its sales from the U.S. government, will use the proceeds to repay debt, the filing said. Morgan Stanley in New York and London-based Barclays Plc led the sale.

GM, Visa

The offering was the first of ten scheduled for this week that together may raise as much as $17.5 billion, data compiled by Bloomberg show. General Motors Co. sold $15.8 billion of common shares today, more than the $10.6 billion the Detroit- based company initially sought, according to a company statement and data compiled by Bloomberg.

GM’s IPO may ultimately raise $18.14 billion, the company said in a news release today.

The offering is the second-largest in U.S. history after San Francisco-based Visa Inc.’s $19.7 billion sale in March 2008, data compiled by Bloomberg show. The biggest U.S. automaker may also raise as much as $5 billion from a sale of preferred shares, including an overallotment option, GM said today.

GM increased the size of its IPO even after the S&P 500 retreated for a fourth straight day. The benchmark gauge for U.S. equity tumbled 1.6 percent to 1,178.34 yesterday amid concern that the debt crisis in Ireland and Greece is worsening and China will act to slow its economy. The S&P 500 advanced less than 0.1 percent today.

Bitauto’s IPO

Bitauto Holdings Ltd., the Beijing-based provider of Internet content for China’s automotive industry, raised $127 million selling 10.6 million shares at $12 each, the top end of its forecast range, according to a statement today. The shares advanced 3.8 percent to $12.45 today.

The price for Booz Allen’s IPO was 215 percent more than the average per-share amount of $5.40 paid by existing owners, according to the filing and data compiled by Bloomberg. Washington-based Carlyle didn’t plan to sell its holding in Booz Allen and retained a 71 percent stake, the SEC filing said.

Booz Allen was valued at 25 times estimated earnings based on the original midpoint price, according to estimates from Marina del Ray, California-based IPOdesktop.com.

That’s more than double the average of 11 times estimated profit for Arlington, Virginia-based CACI International Inc., L- 3 Communications Holdings Inc. of New York, and ManTech International Corp. in Fairfax, Virginia, three companies that Booz Allen identified as competitors in its filing.

Earnings Results

Booz Allen’s revenue increased 18 percent to $5.12 billion in its fiscal year ended March 31, the filing said. The firm reported a $25.4 million profit for the period, compared to a $49.4 million loss in the year ended March 31, 2009.

In the six months ended Sept. 30, the company’s sales rose 8 percent from a year ago to $2.71 billion. Net income more than doubled to $43 million, according to the SEC filing.

Booz Allen was founded in 1914 by Edwin Booz. It provides management and technology consulting services to the U.S. government in areas from defense and intelligence to health care, according to its prospectus.

“We had an extensive conversation about how we should price this particular deal,” Ralph Shrader, Booz Allen’s chairman, president and chief executive officer, said in a telephone interview from the NYSE. “Our stock has traded up, so we’re very pleased with that.”

LPL Investment, Harrah’s

The offering was the first of at least four from companies backed by private equity firms this week, data compiled by Bloomberg show.

LPL Investment Holdings Inc., the Boston-based brokerage and investment advisory firm owned by TPG Capital and Hellman & Friedman LLC, sold 15.66 million shares at $30 each today. Fort Worth, Texas-based TPG and Hellman & Friedman of San Francisco bought about 60 percent of LPL in 2005.

Aeroflex Holding Corp., owned by San Francisco-based Golden Gate Capital, Veritas Capital of New York and a buyout fund run by Goldman Sachs Group Inc. in New York, will offer 17.25 million shares at $13.50 to $15.50 tomorrow, its filing said.

The maker of semiconductors and testing equipment hasn’t posted a profit since it was taken private in August 2007. IPO buyers are being asked to spend 141 percent more than the average price that current investors paid for their stakes, data compiled by Bloomberg show.

Harrah’s Entertainment Inc., the world’s biggest casino company, will sell 31.3 million shares for $15 to $17 each tomorrow, its filing said. The Las Vegas-based company will change its name to Caesars Entertainment Corp. before the IPO.

Leon Black’s New York-based Apollo Global Management LLC and David Bonderman’s TPG took Harrah’s private for $30.7 billion, including debt and transaction costs, in January 2008.

To contact the reporter on this story: Cecile Vannucci in New York at cvannucci1@bloomberg.net.

To contact the editor responsible for this story: Daniel Hauck at dhauck1@bloomberg.net.

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