Investment bank Houlihan Lokey Inc. has taken the next step
toward a stock-market listing by making a confidential filing for
an initial public offering, people familiar with the company
said.
The firm, which advises companies and investors on mergers,
bankruptcies, shareholder activism and other situations, has been
actively contemplating an IPO since last year, The Wall Street
Journal previously reported. The interest in listing was sparked in
part by the rising share of deal-making business going to boutique
advisory firms, and by the IPO last year of Moelis & Co., a
deals and restructuring adviser.
Houlihan is aiming to make its filing public and launch the IPO
later this year, the people said. It is working with Goldman Sachs
Group Inc. and Bank of America Corp. on the deal, they added.
Companies can file confidentially for U.S. IPOs if they generate
under $1 billion in annual revenue. Houlihan generated about $700
million in revenue in its prior fiscal year, a person familiar with
the matter said, making it one of the largest independent
investment banking and corporate advisory firms.
It's not yet clear what value Houlihan would fetch in an IPO.
Based on its size relative to Moelis, it could be worth around $2
billion. Moelis, which had revenue of $519 million in 2014, has a
market capitalization of about $1.6 billion.
Moelis shares are up 20% from their debut price, though they are
down about 14% since the beginning of the year.
Houlihan, founded in 1972, may be best known for advising on
some of the biggest bankruptcies in history, including those of
Enron and Lehman Brothers Holdings Inc. It also provides merger
advice on a large number of deals under $5 billion, and is one of
the few deal advisers that works with activist investors. It works
with clients on sales of complex financial assets and provides
valuation assessments for mergers.
Houlihan may be joined this year with the public debut of
another adviser. PJT Partners is being formed by a combination of
the advisory unit of investment firm Blackstone Group LP and a
closely-held boutique started by Paul J. Taubman, a former Morgan
Stanley deal maker. The new business will be spun off to Blackstone
shareholders, according to public filings. The timing of that
listing is not yet clear, but is expected this year, Blackstone has
said.
Houlihan would be larger in terms of revenue and the number of
senior deal makers, with over 125 managing directors. PJT generated
$398 million in advisory revenue last year, according to a filing,
and counts 38 partners across its advisory units focused on
M&A, restructuring and fundraising, the March filing said.
Japanese investment firm Orix Corp. owns a roughly 51% stake in
Houlihan. It invested about $500 million in the firm in 2006. The
rest of Houlihan is owned by its employees. Orix, which appointed a
new chief executive of its U.S. arm last year, is expected to sell
some of its stake in any offering, though it's unclear how much,
the Journal has reported.
Houlihan CEO Scott Beiser previously told the Journal that the
firm views an IPO as a way to improve its brand awareness and
attract talented bankers with offers to own its listed shares.
As it has moved toward an IPO, Houlihan has expanded its
industry coverage through acquisitions of technology M&A
adviser ArchPoint Partners, financial-services M&A adviser
Milestone Advisors and Chicago consultant Bridge Strategy Group. It
has expanded globally, including recently opening an Australia
office.
Write to Liz Hoffman at liz.hoffman@wsj.com and Telis Demos at
telis.demos@wsj.com
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