DC Capital plans IPO for new government services firm

Reston, Virginia-based government services contractor Caliburn International Corp. has filed for an initial public offering to raise $100 million from investors.

Caliburn filed the required S-1 registration statement with the Securities and Exchange Commission on Oct. 19, nearly two months after its private equity owner DC Capital Partners formed the company through a roll-up of four portfolio businesses acquired since 2011.

Should the IPO proceed, Caliburn would trade on the New York Stock Exchange under the ticker symbol “CLBR.” The $100 million figure represents the total value of stock Caliburn is offering to its underwriters for distribution to prospective shareholders. A number of shares to be offered and price range has not been determined.

Jefferies, Merrill Lynch, Pierce, Fenner & Smith and SunTrust Robinson Humphrey are joint book-running managers for the proposed offering. Cowen and Co. and Raymond James & Associates are co-managers for the proposed offering.

An official from Caliburn did not respond to requests for comment.

Caliburn provides engineering, technical and other professional services across 32 countries to federal agencies such as the State, Defense and Health and Human Services departments; plus commercial customers. Last year’s pro forma revenue totaled $784.7 million.

The endless game of speculation over government market dealmaking activity often centers around two main themes: where publicly-traded companies could go in either in terms of acquisitions or divestitures, as well as where private equity investors may be looking to enter or exit their investments.

In fact, when a government services company files the registration statement to public it can often foreshadow an eventual sale of that business to another owner and leaving the IPO track.

But that possibility of a contractor going public was raised just last month at a conference hosted by Morrison & Foerster. Jean Stack, managing director for investment bank Baird’s government services group, said some large companies held by private equity may not be natural platforms from which strategic buyers can acquire and grow from.

“The jury is out on what happens to them, I think a lot of them for their ultimate liquidity will need to go public because there’s just not another exit option available,” Stack said.

Here is some recent IPO filing history. Then-SRA International filed for an public offering in July 2015 that would have taken them back into the public markets only to merge into what became CSRA in November. Alion Science and Technology Corp. also filed for an IPO in April 2015 before Veritas Capital acquired them in August.

Companies also have the option of undertaking a dual-track process to keep their options open. They can file the S-1 statement and communicate with prospective buyers at the same time. This was apparently the case with SRA and Alion.

Not counting spinoffs of services businesses out of parent companies, the last true major IPO in the government IT and professional services market was courtesy of Booz Allen Hamilton in 2010 to start then-owner Carlyle Group’s eventual exit from that investment.

Vencore was well on its way to a traditional IPO last year before the September 2017 announcement that it would merge with DXC Technology’s federal business and KeyPoint Government Solutions to create what is now Perspecta.

The $4.2 billion-revenue Perspecta opened for business in June with DXC’s stockholders owning 86 percent of the shares and Vencore’s private equity owner Veritas Capital owning 14 percent. Veritas had owned Vencore for seven years. Private equity firms typically own government services companies for between three and five years.

Caliburn’s trace back to DC Capital’s acquisition in 2008 of engineering and professional services provider Kaseman. The investment group three years later acquired another similar company in Michael Baker International, which itself purchased security and logistics provider Sallyport Global Holdings earlier that year.

Kaseman since has been consolidated into Sallyport, which itself is now part of the consolidated Caliburn business.

Also to form Caliburn, DC Capital picked up the pace on deals over the past 12 months that included the December 2017 purchase of stability operations company Janus Global Operations.

That was followed by the March 2018 acquisitions of global medical support firm Comprehensive Health Services and construction consulting firm Project Time & Cost LLC.