After filing its Form S-1 last week, LPL Financial appears poised to take its shares public on Nov. 17, according to a report on Tuesday in Investment News, which cites anonymous sources familiar with the deal.
An LPL Financial spokesperson told AdvisorOne.com in a phone call late Tuesday, “Consistent with our quiet period, we have no comment beyond our public filings.”
Asked about the timing of the IPO, advisor Carlo Panaccione of Navigation Group, an affiliate of LPL in Redwood Shores, Calif., said in a phone interview that he wasn't surprised, "since the company’s been doing a dog and pony show” recently.
“I do have units and like the company,” explained Panaccione, a top producer, who will be gaining some liquidity with the IPO. “I use LPL because I like their programs. The IPO brings validity to what independents do. It’s exciting for the company and hopefully for clients.”
Chip Roame, head of the consultancy Tiburon Strategic Advisors, said in a phone interview, “The timing seems as good as any other. They likely want to get this done this year, and pre-Thanksgiving is likely better than pre-Christmas. And there may be covenants in their agreement with the private-equity firms that nobody knows.”
Private equity firms Hellman & Friedman LLC and TPG Group each own a 36% stake of LPL Financial. After the IPO, their respective stakes will shrink to about 31.5%, analysts point out, and the company should have some 107 million shares outstanding.
LPL Financial’s amended Form S-1 assumed an IPO price of $28.50 per share for 17,176,195 shares of common stock. The $28.50 price is midway between the $30/share and $27/share range the company said it expected at the time of its offering. At a $30/share price, the 17 million shares — which represent the publicly traded minority stake in the firm — would be valued at $515.28 million.
“My guess is that it will be oversubscribed,” regardless of whether the broader market is having an up or down day, Roame said. “Their offer price might have to overcome some challenges. But it’s a unique story, and the institutions will want to own.”
The company, led by Chairman Mark Casady (left), said it expected its stock to be listed on the Nasdaq Global Select Market with the ticker LPLA.
Lead underwriters for the offering are Goldman, Sachs; Morgan Stanley; Bank of America/Merrill Lynch and JPMorgan Chase; the filing said the underwriters will be able to purchase up to an additional 1.56 million shares from LPL Investment Holdings Inc. and “one of our stockholders.”
In late October, LPL Investment Holdings released earnings from the third quarter of 2010 and reported net income of $26.1 million, or 26 cents a share, compared to a loss of $1.5 million, or 2 cents a share, in the third quarter of 2009.
The total number of financial advisors affiliated with the company as of Sept. 30, 2010, was 12,017, down slightly from 12,027 last year and 12,066 in the second quarter of 2010. This puts it behind Morgan Stanley, Bank of America-Merrill Lynch and Wells Fargo Advisorsin the bragging rights for most FAs, but ahead of Ameriprise Financialand UBS-Americas.
LPL said it added 128 new advisors to its ranks over the prior 12 months, excluding attrition in the fourth quarter of 2009 related to the consolidation of certain affiliates.