HCA Holdings Inc., a hospital chain,
plans to sell stock valued at as much as $4.28 billion in what
would be the largest U.S. private-equity-backed initial public
offering on record.
HCA, based in Nashville, Tennessee, will offer as many as
142.6 million shares at $27 to $30 each, according to a filing
today. The company aims to sell 87.7 million shares and its
owners are offering 36.3 million. Underwriters have the option
to purchase an additional 18.6 million shares.
HCA was taken private five years ago in a $33 billion
leveraged buyout. Now the owners, including KKR & Co., Bain
Capital LLC and Bank of America Corp., are attempting to exploit
a “relatively favorable market environment” for U.S. private
equity offerings after the $2.9 billion stock sale this month by
Kinder Morgan Inc., an energy pipeline company, said Josef Schuster, founder of IPOX Schuster LLC in Chicago. HCA may be
‘pushing the envelope,” Schuster said.
“They’re seeking to take advantage of a perceived window
of opportunity, but they are going to have some trouble pricing
towards the high end,” Schuster said in a telephone interview.
“I would be surprised if everyone jumps in on this deal.”
The IPO of Houston-based Kinder Morgan, selling 95.5
million shares at $30 each, raised 23 percent more money than
the company originally sought. Kinder Morgan represents the
biggest completed private-equity-backed IPO. Nielsen Holdings
NV, a New York-based provider of information and analytics,
raised $1.6 billion in January.
HCA plans to list on the New York Stock Exchange and trade
under the symbol “HCA.” HCA Holdings is the parent company, as
of last November, of HCA Inc.
The HCA headquarters. Photographer: Harrison McClary/ Bloomberg
No Dividend
The private-equity owners are selling 24 percent of the
company, a bigger portion than at Kinder Morgan or Nielsen,
Schuster said. HCA isn’t offering a dividend and is basing its
value on the company’s earnings strength and not revenue growth,
he said.
“So it’s neither a growth nor a value stock,” Schuster
said.
The hospital operator is trying to go public less than four
months after taking on new debt to pay its owners a $2 billion
dividend. In 2010, the owners paid themselves a total of about
$4.3 billion in dividends.
The private equity investors put up about $5.3 billion to
buy the company, according to a regulatory filing, funding the
rest with loans from banks, including Charlotte, North Carolina-
based Bank of America; and JPMorgan Chase & Co. and Citigroup
Inc., both in New York. Those three banks will be the lead
underwriters on the planned offering.
“This will be a good test of the market to see if it can
take an offering this large,” said Les Funtleyder, an analyst
at Miller Tabak & Co. in New York. “If HCA is successful,
you’ll probably see a lot more offerings after that.”
May Filing
HCA had $30.7 billion in revenue last year and net income
of $1.57 billion, according to the filing.
The company first filed for a public offering in May, and
reapplied in December after selling $1.53 billion of 10.5-year
notes to help pay for the dividend. In the May filing, the
company said it planned to raise $4.6 billion and use $2.5
billion in net proceeds to the HCA treasury to repay debt.
HCA operated 164 hospitals and 106 freestanding surgery
centers as of Dec. 31, according to a filing.
The original HCA was founded as Hospital Corp. of America
in 1968, when a Nashville physician named Thomas Frist Sr.; his
son, Thomas Frist Jr.; and Jack Massey built a hospital and
formed one of the first hospital companies in the U.S. Thomas
Frist Sr. is also the father of Bill Frist, a physician and a Tennessee Republican who is a former U.S. Senate majority
leader.
src: bloomberg