HCA Holdings Inc (NYSE:HCA) announced Monday that its private equity backers Bain Capital Partners LLC and KKR & Co. L.P. (NYSE:KKR) are planning to sell up to 50 million of its stock in a secondary offering. At its current price of about $36, the HCA shares could be worth close to $1.8 billion. HCA Holdings said it won’t take any proceeds from the offering, all the proceeds will go to selling stockholders.
HCA Holdings Inc (NYSE:HCA) said the offering would close by February 15, 2013. After the offering, Hercules Holding will reduce its stake in the company from the current 51 percent to 39 percent.
Hercules Holding is held by KKR & Co. L.P. (NYSE:KKR), Bain Capital Partners LLC and HCA founder Thomas Frist Jr. As of Jan. 31, HCA had about 443.6 million outstanding shares.
ADW Capital’s 2020 letter: Long CDON, the future Amazon of the Nordics
ADW Capital Partners was up 119.2% for 2020, compared to a 13.77% gain for the S&P 500, an 11.17% increase for the Russell 2000, and an 8.62% return for the Russell 2000 Value Index. The fund reports an annualized return of 24.63% since its inception in 2005. Q4 2020 hedge fund letters, conferences and more Read More
By the end of December 2012, KKR and Bain each owned 74.2 million HCA shares, giving them a 16.8 percent stake each in the company, according to FactSet. KKR and Bain Capital were among the companies that took HCA Holdings Inc (NYSE:HCA) private in 2006.
Merril Lynch and Frist family (founders of HCA) were among the other investors. The buyout, valued at $21.3 billion, took place during the private equity boom years. Bain Capital and KKR & Co. L.P. (NYSE:KKR) invested about $4.9 billion back then, and financed the remaining amount with debt.
The hospital operator again went public in March 2011 with a $3.79 billion IPO. It was the biggest private equity-backed IPO in history. Thomas Frist Jr. is the largest shareholder in the company with 78 million shares.
Private equity firms attracted about $702 billion during the boom years. But they couldn’t use all the money raised. Cambridge Associates, a research and consulting firm, said that about 28 percent of the total money raised between 2006 and 2008 has been returned to investors. Another $100 billion of $702 billion raised during that period hasn’t been used so far.
The investment period for those old funds, about five years, are running out. So the firms would either use or lose them by the end of 2013. Another problem is that performance of the private equity firms has declined. The industry average is just 6 percent, even lower than 7.5 percent that pension funds pay retirees. And KKR & Co. L.P. (NYSE:KKR) is one of the biggest underachievers.
Shares of HCA Holdings Inc (NYSE:HCA) dipped 1.53 percent to $36.09 in early trading.