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Allison Transmission Raises $600 Million Via I.P.O.
by
Derek Kreindler
(IC: employee)
Published: March 16th, 2012
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An I.P.O for a physical product is a refreshing change from the Tech 2.0 bubble we’ve been subjected to lately. Allison Transmission, formerly of General Motors, just issued their first I.P.O, raising $600 million for the company. Allison is now valued at $4.2 billion.
Allison’s current owners, which include the Carlyle Group and Onex (both private equity firms), should reap a fairly decent return from the company, having only invested $1.5 billion on their own (the rest of the money was borrowed). The two firms purchased Allison in 2007. Shares are going for about $23 each, though that may change if the underwriters of the deal decide to issue more. As of 1 PM Friday, the stock was up 3.03 percent to $24.11.
Derek Kreindler
More by Derek Kreindler
Published March 16th, 2012 1:25 PM
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In fact, the $600 million was not raised "for the company." From the cover of the prospectus: "We will not receive any proceeds from the sale of shares held by the selling stockholders." Other points from the prospectus that could be noted - total expenses to Allison for the offering are ~$6mm. They've also paid Carlyle and Onex ~$16mm to terminate the "services agreement" entered into in connection with the LBO.
Let me get this right, GM was paid ca 5.6 G$, where only ca 1.6 G$ represented the companies value (the rest presumably was assumed debt and good will), and now it is worth 4.2 G$ ... Perhaps the value of the company is greater, but for the original investors, aren't hey are still like 500-800 M$ in the hole?