KKR- and Bain-backed HCA files $4.6bn IPO

Post-IPO - which is expected to be the largest PE-backed listing in three years - Bain and KKR stand to recoup 75% of their original investment, while still retaining an 80% stake in HCA.

HCA, backed by Kohlberg Kravis Roberts and Bain Capital, filed for an IPO Friday of up to $4.6 billion.

HCA, the biggest hospital operator in the US, said it would generate roughly $2.5 billion in gross proceeds from the IPO. The company plans to use the proceeds to pay down debt and for general corporate purposes.

According to media reports, HCA announced plans in January to pay its owners a $1.75 billion dividend and declared another distribution of $500 million this week. These dividends paid back roughly half the private equity firms' original investment. After the IPO, the firms could stand to recoup 75 percent of the cash they put in, while still retaining an 80 percent stake in the company.

HCA was bought in 2006 in a $21 billion deal that also included Bank of America (Merrill Lynch Global Private Equity) and HCA’s founder. The deal included the assumption of $11.7 billion in debt, making it the largest leveraged buyout in history at the time, eclipsing KKR’s 1989 buyout of RJR Nabisco for $31.8 billion.

The total equity used in the deal was $5 billion.

HCA was founded in the 1960’s by former US Senator Bill Frist’s brother Thomas Frist Jr. and his father Thomas Frist Sr. HCA operates 162 hospitals with 106 freestanding surgery centers across 20 states in the United States and in England.

Another KKR- and Bain-backed investment, NXP Semiconductors, filed for an IPO of up to $1.15 billion in April. KKR and Bain, along with Silver Lake Partners, Apax and AlpInvest Partners, bought an 80.1 percent stake in the Dutch company from Koninklijke Philips Electronics in 2006 for €9 billion.