LPL Financial Announces Proposed $1.5 Billion Common Stock Offering

Rhea-AI Summary

LPL Financial Holdings Inc. (NASDAQ: LPLA) has announced a $1.5 billion common stock offering with Morgan Stanley & Co. as the sole active book-running manager. The underwriters will have a 30-day option to purchase an additional $225.0 million of common stock.

The proceeds will primarily fund the previously announced acquisition of Commonwealth Financial Network, with any remaining funds allocated for general corporate purposes. LPL plans to use available cash and additional borrowings to complete the transaction funding.

LPL Financial currently supports nearly 29,000 Financial Advisors and approximately 1,200 financial institutions, managing about $1.7 trillion in brokerage and advisory assets for approximately 6 million Americans.

Positive

• Large-scale expansion through Commonwealth Financial Network acquisition
• Strong market position with $1.7 trillion in assets under management
• Extensive network of 29,000 financial advisors and 1,200 financial institutions

Negative

• Potential shareholder dilution from $1.5 billion stock offering
• Additional debt burden expected through supplementary borrowings for acquisition
• Increased financial leverage and associated risks from major acquisition funding

Insights

Financial Analyst

LPL Financial's $1.5 billion common stock offering represents a significant capital raise that will likely create meaningful dilution for existing shareholders. Based on LPL's current $25.5 billion market cap, this offering represents approximately 5.9% dilution, potentially reaching 6.8% if underwriters exercise their $225 million option.

The primary purpose of this equity issuance is financing LPL's previously announced acquisition of Commonwealth Financial Network, with the remainder of the purchase price coming from cash reserves and debt. This balanced financing approach suggests management is mindful of maintaining appropriate leverage ratios while pursuing strategic growth.

Without knowing Commonwealth's acquisition price, assessing the overall transaction value becomes challenging. However, this move aligns with industry consolidation trends as wealth management firms seek scale advantages. LPL already services $1.7 trillion in assets across 29,000 financial advisors, making this acquisition potentially transformative if Commonwealth brings substantial advisor relationships and assets.

The selection of Morgan Stanley as sole active book-runner indicates confidence in securing institutional investor participation despite the dilutive effect. While existing shareholders face near-term dilution, the long-term strategic benefits could outweigh this impact if the Commonwealth acquisition creates meaningful synergies and accelerates LPL's already fast growth trajectory in the wealth management space.

Investment Banking Expert

This $1.5 billion equity offering represents a textbook example of acquisition financing, with LPL utilizing the public markets to fund a strategic purchase rather than overleveraging its balance sheet. The timing is particularly notable—coming just days after their shelf registration became effective on March 25—indicating careful pre-planning of the capital structure for the Commonwealth acquisition.

The underwriting structure with Morgan Stanley as sole active book-runner suggests a streamlined approach designed for efficient execution. The addition of a 15% greenshoe option ($225 million) provides flexibility to accommodate excess demand while generating additional proceeds if needed.

LPL's disclosure that they'll use "available cash and other borrowings" alongside this equity to complete the transaction indicates a multi-source financing approach. This strategy helps preserve financial flexibility and maintain credit metrics, particularly important given that wealth management firms generally require strong balance sheets to instill confidence among financial advisors and their clients.

Investors should note the contingency language indicating proceeds could be redirected to "general corporate purposes" if the Commonwealth transaction doesn't close. This provides management with capital deployment flexibility but also introduces execution risk around the intended acquisition. The market's reaction will largely depend on investor perception of the Commonwealth acquisition's strategic value versus the immediate dilution from issuing approximately 6% of LPL's current market capitalization in new shares.

SAN DIEGO, March 31, 2025 (GLOBE NEWSWIRE) -- LPL Financial Holdings Inc. (NASDAQ: LPLA) (together with its subsidiaries, including LPL Financial LLC, “LPL Financial” or “LPL”) today announced that it has commenced an underwritten public offering of $1.5 billion of its common stock.

Morgan Stanley & Co. LLC is acting as sole active book-running manager. LPL also intends to grant the underwriters a 30-day option to purchase up to an additional $225.0 million of its common stock.

LPL intends to use the net proceeds of this offering to fund a portion of the cash consideration payable in connection with its previously announced proposed acquisition of Commonwealth Financial Network (the "Transaction") and, to the extent that any proceeds remain thereafter, or if the Transaction is not completed, for general corporate purposes. In addition to the net proceeds from this offering, LPL expects to use available cash and other borrowings to fund the purchase price for the Transaction.

The securities described above are being offered by LPL pursuant to a shelf registration statement on Form S-3 that was previously filed with the Securities and Exchange Commission (the “SEC”), which became effective on March 25, 2025. The offering will be made only by means of a written prospectus and prospectus supplement. A preliminary prospectus supplement and accompanying prospectus relating to the proposed offering will be filed with the SEC and will be available on the SEC’s website located at http://www.sec.gov. Copies of the preliminary prospectus supplement and the accompanying prospectus relating to the proposed offering may also be obtained, when available, from Morgan Stanley & Co. LLC, Attention: Prospectus Department, 180 Varick Street, 2nd Floor, New York, NY 10014, or email: prospectus@morganstanley.com.

This press release is neither an offer to sell nor a solicitation of an offer to buy any of the common stock or any other security of LPL, nor shall there be any sale of the common stock in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.

About LPL Financial
LPL Financial Holdings Inc. (Nasdaq: LPLA) is among the fastest growing wealth management firms in the U.S. As a leader in the financial advisor-mediated marketplace, LPL supports nearly 29,000 Financial Advisors and the wealth management practices of approximately 1,200 financial institutions, servicing and custodying approximately $1.7 trillion in brokerage and advisory assets on behalf of approximately 6 million Americans. The firm provides a wide range of advisor affiliation models, investment solutions, fintech tools and practice management services, ensuring that Advisors and institutions have the flexibility to choose the business model, services, and technology resources they need to run thriving businesses.

Securities and advisory services offered through LPL Financial LLC, a registered investment advisor and broker-dealer, member FINRA/SIPC.

Throughout this communication, the terms “Financial Advisors” and “Advisors” are used to refer to registered representatives and/or investment advisor representatives affiliated with LPL Financial LLC.

Forward-Looking Statements
Certain of the statements included in this release, such as those regarding the timing, size and completion of the offering and the anticipated use of proceeds therefrom, constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words such as “expects,” “believes,” “anticipates,” “plans,” “assumes,” “estimates,” “projects,” “intends,” “should,” “will,” “shall” or variations of such words are generally part of forward-looking statements. Applicable risks and uncertainties include those related to market conditions and satisfaction of customary closing conditions related to the proposed public offering. There can be no assurance that we will be able to complete the public offering on the anticipated terms, or at all. Certain additional important factors that could cause actual results or the timing of events to differ, possibly materially, from expectations or estimates expressed or implied in such forward-looking statements can be found in the “Risk Factors” section included in LPL Financial’s most recent Annual Report on Form 10-K. Except as required by law, LPL Financial does not undertake to update any particular forward-looking statement included in this document as a result of developments occurring after the date of this press release, except as may be required by applicable law.

Contacts

LPL Media Relations
media.relations@lplfinancial.com

LPL Investor Relations
investor.relations@lplfinancial.com

FAQ

What is the size of LPL Financial's (LPLA) new stock offering announced in March 2025?

LPL Financial announced a $1.5 billion common stock offering, with an additional 30-day option for underwriters to purchase up to $225.0 million of common stock.

How will LPL Financial (LPLA) use the proceeds from its $1.5 billion stock offering?

The proceeds will primarily fund the acquisition of Commonwealth Financial Network, with any remaining funds used for general corporate purposes.

What is the current asset size managed by LPL Financial (LPLA) as of March 2025?

LPL Financial services approximately $1.7 trillion in brokerage and advisory assets on behalf of about 6 million Americans.

How many financial advisors does LPL Financial (LPLA) support?

LPL Financial supports nearly 29,000 Financial Advisors and wealth management practices of approximately 1,200 financial institutions.

Who is the book-running manager for LPL Financial's (LPLA) $1.5 billion stock offering?

Morgan Stanley & Co. is acting as the sole active book-running manager for the offering.