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Friday, June 04, 2010

LPL's Going Public

Reported by Neil Anderson, Managing Editor

LPL, the nation's largest independent broker-dealer (and the godfather of that business model), is going public. Today the Boston and San Diego-based firm filed its initial S-1 with the SEC.


LPL's top execs, clockwise from bottom right: chairman and CEO Mark Casady, president and COO Esther Stearns, chief financial officer Robert Moore and president of national sales and marketing Bill Dwyer.
Photo taken from LPL's 2009 annual report
Bank of America Merrill Lynch, Goldman Sachs, JPMorgan and Morgan Stanley are listed as the initial public offering's underwriters. LPL's ticker will be LPLA.

LPL Investment Holdings has not released anticipated share price or quantity information for the IPO. Yet on May 24 it sealed a new credit agreement, raising $580 million to pay off "senior unsecured subordinated notes due 2015," and the firm still has $317.1 million left from a $500 million loan to payback in 2013. And LPL confirmed that at least some of the IPO's proceeds will be used to pay back part of its "senior secured credit facilities." Its total indebtedness on March 31 was $1.4 billion.

Not surprisingly, the filing includes a wealth of interesting tidbits on LPL.

As of March 31, LPL boasted 12,026 independent advisors, and it serves more than 4,000 more via it clearing and back-office support. Its worked with $285 billion in assets (including $81 billion in advisory, i.e. RIA, assets). Last year LPL net added 750 advisors and brought in more than $28 billion in brokerage sales (including $10 billion in mutual fund sales) and $23 billion in advisory sales (mostly mutual fund sales).

Funds controlled by private equity firms Hellman & Friedman and TBG Capital bought LPL Holdings in December 2005. Hellman & Friedman LLC and TPG Partners IV each hold 36.3 percent (34.2 million shares) of LPL's common stock. Chairman and CEO Mark Casady holds another 4.1 percent of the company, Esther Stearns (president and chief operating officer) holds 2.2 percent and Bill Dwyer (president of national sales and marketing) holds 1.9 percent

LPL earned $47.5 million in income in 2009 ($0.47 per diluted share), thanks to $2.75 billion in revenue. And it earned another $25.5 million ($0.25 per diluted share) in the first quarter of 2010, against $743.4 million in revenue (including $115.0 million in mutual fund commissions).

Casady earned a base salary of $800,000 in 2009, and he also earned a $1.5 million bonus and more than $1.4 million in options. 

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