US government-focussed management and technology consultancy Booz Allen Hamilton Holding has raised US$238m from its initial public offering on the New York Stock Exchange.
The company issued 14 million shares of Class A common stock, representing…
US government-focussed management and technology consultancy Booz Allen Hamilton Holding has raised US$238m from its initial public offering on the New York Stock Exchange.
The company issued 14 million shares of Class A common stock, representing approximately 10% of its newly enlarged share capital, at US$17 per share. While the listing price was at the low end of the US$17 to US$19 pricing range, the IPO proved popular with investors with the shares closing up 13.2% at the end of the first day of trading, giving the company a market cap of just under US$2.7bn.
Morgan Stanley, Barclays Capital, BofA Merrill Lynch and Credit Suisse are acting as joint book-running managers and underwriters for the offering with Stifel, Nicolaus & Company co-lead manager and BB&T, Lazard and Raymond James as co-managers.
These underwriters have an over-allotment option to purchase an additional 2.1 million shares, which would raise a further US$35.7m.
Net proceeds from the listing are expected to be approximately US$216.7m and will be used to repay US$210.4m of the company’s US$461m mezzanine credit facility, with the remaining US$6.3m used to fund the related debt prepayment penalty. The mezzanine facility, which carries an interest of 13% and matures 31 July 2016, was originally US$545m but Booz Allen made an optional prepayment of US$85m in August 2010.
The unsecured debt was part a wider US$1.255bn financing package that supported private equity firm Carlyle’s US$2.5bn LBO of Booz Allen’s government-consulting business back in mid-2008.
Prior to the IPO, Carlyle owned 77% of Booz Allen’s outstanding common stock and 79% of the total voting power. Due to dilution, on completion Carlyle will retain a 69% economic stake, representing 71% of the voting power. The sponsor also maintains its board majority, nominating four of the seven Booz Allen board members.
While Booz Allen is hugely exposed to any potential shift in US governmental spending, with 98% of its fiscal 2010 revenues derived from the state, the consultancy has done particularly well over the past couple of years in securing a number of lucrative Department of Homeland Security contracts, particularly in cyber-security. It also has a burgeoning space business, winning contracts for the Transformational Satellite Communications System (TSAT), the Constellation Program and the US Navy’s National Security Space Acquisition Policy.
For the six months ended 30 September 2010, Booz Allen’s revenues rose by 8% year-on-year to US$2.71bn, while net income more than doubled from US$19.2m to US$42.9m.
