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Taking advantage of the stabilizing economy, more and more firms are riding the IPO wave these days. Following in the footsteps of other companies, including Nielsen Holdings, NXP Semiconductors and Toys R Us, Booz Allen Hamilton has announced that it will be putting itself on the market. Just two years after its split from corporate sibling Booz & Company and having sold a majority stake to private equity bigwig Carlyle Group, Booz Allen Hamilton filed for an initial public offering of its stock. Carlyle Group is looking to raise up to $300 million from the public, which it will use to pay down debts. In December Booz Allen raised $350 million in debt to help pay out a $550 million dividend to Carlyle Group—which returned almost half of Carlyle's original equity investment to the firm and its investors. The firm has secured Morgan Stanley, Barclays Capital, BofA Merrill Lynch and Credit Suisse Securities to lead the deal.
Carlyle has greatly benefited from the purchase of Booz Allen, considering the firm has deep roots in the defense and government sector, and the U.S. government's increased reliance on outsourcing in defense. Carlyle, it has been reported, does not plan to sell any shares as part of the offering. At this point, Booz Allen has not revealed how many shares it will be selling, nor the expected price range.
How will the public respond to such an offering? “Investors may be receptive to invest in a consulting company,” said Jack Ablin, chief investment officer at Chicago- based Harris Private Bank. “I wouldn’t call it a big financial risk. Worst case is they just don’t grow because the economic backdrop is weak.”
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