Thursday, July 1, 2010

PEU's Great Cash In

Bloomberg noted the plethora of private equity underwriters (PEU's) conducting IPO's. Big names, from The Carlyle Group to KKR, are ringing the register on affiliates. The article stated:

HCA, the hospital chain bought four years ago in a $33 billion LBO led by KKR & Co. and Boston-based Bain Capital LLC, filed with the SEC in May to sell $4.6 billion of shares.

The hospital operator will get about 54 percent of the proceeds, which will be used to pay back some of its $25.7 billion in debt. HCA’s owners, who used borrowed money for more than 80 percent of the purchase price, will get the rest.

PEU owners will garner $2.1 billion from HCA's IPO. The article didn't cite previous bleeding of HCA via special dividends/distributions. SEC filings show HCA paid investors $1.75 billion and $500 million in 2010. Total proceeds to HCA's owners in 2010 will be $4.35 billion. No wonder PEU's salivate over hospitals.