LPL’s coming out party
Shares of LPL Investment Holdings Inc. gained 7.2% in their first day of trading today.
After years of anticipation, LPL last night announced the initial public offering of 15,657,482 shares of its common stock —and was officially listed this morning on the Nasdaq under the symbol LPLA.
The shares were priced at $30 last night, coming in at the high end of the $27 to $30 per share target that LPL provided earlier this month. Trading officially began at 9:30 EST this morning — and the opening bell on the Nasdaq was rung by Mark Casady, LPL's chairman and chief executive.
Shares hit a high of $33.84 at midday and closed at $32.15.
"Our firm's public listing on the NASDAQ Stock Market is an exciting next step for our company," said Mr. Casady, in a statement released this morning. "We selected the symbol 'LPLA' to show our commitment to independent, unbiased advice. The 'A' represents our advisors and the objective advice they give to Main Street investors." (See pictures from the bell ringing this morning.
In total, the IPO netted $470 million for stockholders who sold at the opening price.
When it registered for the offering in June, the independent broker-dealer estimated the deal value might be as high as $600 million. None of the proceeds from the sale of the 15.7 million shares will go to the company.
But hundreds of LPL brokers and dozens of current and former LPL executives sold their shares on Wednesday. Mr. Casady, for one, sold stock worth $58 million, according to the company's earlier filings. (To see who made the most money off the stock sale, Click Here).
The underwriters, lead by The Goldman Sachs Group Inc. and Morgan Stanley, have a 30-day option to purchase up to an additional 1,565,748 shares from the company and a selling stockholder at the initial public offering price, the company said in a statement.
Goldman also raked in $58 million by selling shares in the offering.
LPL Investment Holdings was acquired in 2005 by private-equity firms TPG Capital and Hellman & Friedman LLC. Since then, the brokerage has nearly doubled its number of reps and advisers. Its blistering recruiting pace has slowed in the past couple of years, but it still remained by far the largest independent broker-dealer in the business, according to InvestmentNews' 2010 B-D rankings.
LPL was one of at least four companies backed by private-equity firms scheduled to sell shares this week, the biggest for U.S. IPOs since March 2008, according to data compiled by Bloomberg. The offering came after the S&P 500 halted its longest stretch of declines in three months and General Motors Co. raised more than $20 billion selling common and preferred shares to help repay its taxpayer bailout.
“It shows that investors are still enthusiastic for new issues,” said Jack Ablin, chief investment officer at Harris Private Bank, which oversees $55 billion. (Would you recommend shares of LPL to your clients? Vote here.)
LPL Investment Holdings has more than 12,000 affiliated advisers in its network, with the lion's share at LPL Financial Inc. LPL also generated more annual revenue — $2.6 billion — than any other independent broker-dealer, according to financial rankings compiled by InvestmentNews.
TPG and Hellman & Friedman each own 36 percent of LPL. Neither firm intends to sell shares in the IPO and have retained a combined 64 percent stake in LPL, based on the original terms of the offering.
[This story was supplemented with reporting from Bloomberg News]