UPDATE 4-First Republic files IPO just months after buyout

* Expects offering to be priced at $24-$27/share

* Bank to sell 4 mln shares, stockholders to sell 7 mln

* First Republic’s proceeds could total $92.4 mln

* BofA Merrill, MS, JPMorgan to be book-runners
(Adds First Republic’s valuation and assets, LPL Financial’s
IPO and analyst comment)

By Joe Rauch

CHARLOTTE, N.C., Nov 29 (BestGrowthStock) – First Republic, a bank
catering to the wealthy, said on Monday it plans to raise up to
$297 million in an initial public offering, just a few months
after Bank of America Corp (BAC.N: ) sold the company to buyout

The bank itself is selling about $100 million of shares,
and its main shareholders, including private equity firms
Colony Financial and General Atlantic, are selling about $200
million of their holdings.

The San Francisco-based bank said a total of about 9
percent of the company’s shares will be sold, giving the bank
an implied market value of more than $3 billion. The bank may
use the proceeds to fund loans or buy securities.

In July, Bank of America sold First Republic to a group of
private equity firms. First Republic’s management was part of
the investor group.

Analysts said First Republic’s IPO valuation, and the quick
turnaround by its new owners, suggests Bank of America may have
sold the company too cheaply this summer.

Bank of America has been selling assets all year to raise
funds it needed after repaying emergency capital from the
government last year.

“My gut feeling is that BofA has been selling assets at
somewhat below market value,” said Dick Bove, research analyst
with Rochdale Securities LLC, adding that the bank is selling
businesses most affected by the new capital rules that loom for
the banking industry (Read more about the banking industry recovery.).

While initial terms of the deal were not disclosed, the
July buyout was completed with $1.86 billion of new equity from
Colony Financial, a real estate finance and investment company,
and General Atlantic.

A Bank of America spokesman said the company sold First
Republic as part of a broader strategy to sell some non-core
businesses, and had no further comment.

First Republic’s IPO is the second large financial services
offering in as many months. In November, brokerage giant LPL
Financial (LPLA.O: ) completed a public offering that raised
nearly $470 million. [ID:nN18113463]

As of Sept. 30, First Republic had assets of $22 billion,
with wealth management assets totaling $17.2 billion, making it
one of the 50 largest U.S. banks.

First Republic focuses on banking for wealthy professionals
like doctors and lawyers, whose incomes may be steadier than


Colony Financial and General Atlantic will each sell off 6
percent of their stake, or 1.6 million shares. Each will own
19.8 percent of the bank’s stock after the IPO.

First Republic, which first went public in 1986, expects to
sell shares at $24 to $27 apiece. The bank will sell 4 million
shares in the IPO, while shareholders, including the private
equity firms, will sell 7 million.

At the midpoint of that range, the bank’s proceeds would be
$92.4 million.

The IPO price could value First Republic at as much as $3.1
billion for the bank’s 124 million outstanding common stock

A Colony Financial spokesman said the firm had no comment
on First Republic. A General Atlantic spokesman was not
immediately available for a comment.

In July, First Republic co-founder and Chief Executive Jim
Herbert said the company would watch the market carefully for
opportunities, and an IPO could be on the horizon.

“We went public to give ourselves access to capital
markets, to help us grow,” he said at that time. “We expect
that would be a possibility again in the future.”

He also said First Republic was gearing up to make
acquisitions, expand its branch network and recruit bankers and
money managers.

Herbert will not be selling shares in the IPO, according to
the company’s prospectus.


The two private equity firms in the IPO have a history with
First Republic. General Atlantic was an early investor in the
bank in the 1980s and had a representative on the bank’s board
from 1987 to 1990.

Colony Financial’s founder, Thomas Barrack, has also been a
board member of the bank.

First Republic was owned by Merrill Lynch when Merrill was
acquired by Bank of America at the height of the financial

Merrill never integrated the bank, and First Republic was
tabbed as easy target for BofA to carve off when it started to
sell off assets to boost its capital position and look to
comply with new Basel III and U.S. banking capital rules that
will take effect during the next few years.

The company intends to list its common stock on the New
York Stock Exchange under the symbol “FRC.”

BofA Merrill Lynch, Morgan Stanley and JPMorgan will be
joint book-running managers for the IPO, the company said.
(Reporting by Joe Rauch in Charlotte, N.C.; additional
reporting by Megan Davies and Elinor Comlay in New York and
Sweta Singh in Bangalore; Editing by Don Sebastian and John

UPDATE 4-First Republic files IPO just months after buyout