When LPL Financial filed its long-awaited initial public offering in early June, one of the market’s pressing questions was why now?
The market was still very volatile, subject to headline risk from developments in the European banking system, and sluggish domestic economy. Also, through June 25, about 70 deals had been cancelled or postponed, according to Thomson Reuters. Aside from a couple of big summer dips, however, the Dow Jones has marched steadily up since then, about 11%. Now, the question might be why not?
On Wednesday, LPL Financial set the terms of its public offering, in filings with the Securities and Exchange Commission. The company said it plans to raise about $445 million by selling 15.6 million shares at a price range of some $28.50, according to the filing documents.
Dick Ayotte, CEO and founder of American Brokerage Consultants, says the current environment is not a bad time for the company to finally price its shares. “It is not a bad time to be doing a public offering,” Ayotte said. “There is a lot of money looking for a place to go. I don’t think they’ll have any trouble raising the money they want.”
LPL Financial has grown into a powerhouse of a financial services company over the past decade. Its advisor base has grown from 3,596 advisors in 2000 to 12,017 as of September 30, 2010, representing a CAGR of 13.2%, the company said.
LPL could not return calls seeking comment before deadline, but is restricted from being candid about its plans anyway. The company is still in its quiet period.
That is one piece of a growth profile that will have little trouble generating investor interest in IPOs, according to Greenwich, Conn.-based Renaissance Capital, an IPO research firm. In its third-quarter analysis of the IPO market, Renaissance Capital said U.S. deal flow in the third quarter tracked relatively in line with that of the three preceding quarters. Thirty-three companies went public and raised a total of $5.3 billion. Though the amount of proceeds raised was down 18% year-over-year, it was up 8% sequentially, the company said.