Carlyle Seeks 241% Paper Profit on Booz Allen’s IPO

Booz Allen Hamilton Holding Corp., the consulting firm taken private by Carlyle Group in 2008, is seeking an initial public offering that may hand the buyout firm a 241 percent paper profit on its investment.

Booz Allen, 79 percent owned by Washington-based Carlyle, plans to raise $266 million selling Class A shares at $17 to $19 each, excluding an overallotment option, its filing today with the Securities and Exchange Commission shows. The midpoint price is more than three times the average per-share price of $5.28 paid by existing owners such as Carlyle, the filing showed.

Carlyle, the world’s second-largest private equity firm, is selling Booz Allen after the Standard & Poor’s 500 Index rose 13 percent in the past two months. While more companies completed U.S. IPOs in October than any month in the past three years, 44 percent of the private equity backed deals this year left buyers with losses, according to data compiled by Bloomberg.

“We’re seeing more IPOs, people trying to raise money,” said Giri Cherukuri, a manager at Oakbrook Investments in Lisle, Illinois, which oversees $2.2 billion. “The market environment is getting a little bit better, and there is more confidence in the stock market.”

The Class A shares will trade on the New York Stock Exchange under the ticker BAH. Morgan Stanley in New York and Barclays Plc of London are leading the sale.

Debt Reduction

Booz Allen, which gets 98 percent of sales from contracts with the U.S. government, will use the money to repay debt that totaled $1.54 billion as of June 30, its filing showed. The McLean, Virginia-based company is scheduled to price its shares on Nov. 16, according to data compiled by Bloomberg.

Revenue increased 18 percent to $5.12 billion in its fiscal year ended March 31, the filing showed. Booz Allen reported a $25.4 million profit, versus a loss in the year-earlier period. In the three months ended Sept. 30, the consulting firm estimates sales may have risen as much as 7.5 percent, while net income increased 39 percent to $15 million, the filing showed.

At the middle of the offer range, Booz Allen would be valued at about 37 times earnings, according to of Marina del Rey, California. That’s more than double the median 16 times estimated profit for 20 U.S.-traded providers of consulting services, data compiled by Bloomberg show.

IPO Rebound

The offering comes after 21 companies sold shares last month, excluding closed-end funds and investment companies, the most since 22 deals in December 2007. This week, seven companies scheduled initial sales and at least eight are planning IPOs next week, data compiled by Bloomberg show.

Carlyle, which has more than $90.9 billion in assets, doesn’t plan to unload its holdings of Booz Allen in the offering. The buyout fund will retain control of 71 percent of the consulting firm after the sale.

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 to intelligence to health care, according to its prospectus.

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