COMPANIES

Vencore files for initial public offering, seeks $250M

Vencore has filed for an initial public offering to raise $250 million from investors in a rare instance of a government technology services contractor seeking to become a publicly traded company.

Chantilly, Va.-based Vencore filed an S-1 registration statement required for an IPO Wednesday with the Securities and Exchange Commission. If the IPO goes through, Vencore would trade on the New York Stock Exchange under the symbol "VNCR."

The filings show Vencore posted $1.17 billion in revenue last year; $122.8 million in adjusted earnings before interest, taxes, depreciation and amortization; and $767 million in total debt.

That puts Vencore as government services' ninth-largest public company based on sales in between ManTech International at $1.06 billion and NCI Inc. at $322.4 million. Approximately 39.4 percent of Vencore's sales last year came in the intelligence community, 35 percent in space, 14.5 percent in defense, 9.5 percent in federal civilian and the rest with commercial customers.

The company is ranked No. 27 on the 2017 Washington Technology Top 100 with over $1 billion in prime contracts.

Pending completion, Vencore's entry into the public markets would represent a break from the recent trend of private equity firms' direct sales of government services companies.

Court Square Capital Partners sold Wyle to KBR in July 2016 for $570 million after seven years of ownership and New Mountain Capital sold Camber Corp. to Huntington Ingalls in December 2016 for $380 million after eight years of ownership.

(Both the Wyle and Camber transactions were among our "Top Deals of 2016")

Lindsay Goldberg found a buyer for PAE last year in Platinum Equity after five years in the portfolio and Metalmark Capital found a buyer for Schafer Corp. in Belcan earlier this year after nine years in the portfolio.

The market has also seen several companies file to go public but then opt for a direct sale instead. SRA International started its IPO process in July 2015 then merged into the company now known as CSRA four months later.

Veritas acquired Alion Science and Technology Corp. in August 2015, one month after Alion filed for an IPO to pay down its roughly $561 million in debt.

Vencore traces its roots back to Lockheed Martin, where it once resided as the Enterprise Integration Group. Lockheed sold the EIG business to Veritas in 2010 for $815 million as the government tightened up rules on "organizational conflicts of interest" to prevent contractors from advising agencies on how to formulate contracts and then bidding on the work themselves.

Veritas changed the business' name to The SI Organization, then it adopted the Vencore name in July 2014 shortly after its acquisition of the former QinetiQ North America services group for $165 million.

As The SI, it purchased Applied Communication Sciences in May 2013 from Telcordia.

Mac Curtis has led Vencore as CEO for four years. He is a Veritas portfolio company veteran who held the CEO role at Vangent for four years prior to its acquisition by General Dynamics in 2011 for $960 million.

Curtis also was chief executive role at Vangent's predecessor Pearson Government Solutions for six years. Veritas acquired Pearson in 2007.

About the Author

Ross Wilkers is a senior staff writer for Washington Technology. He can be reached at rwilkers@washingtontechnology.com. Follow him on Twitter: @rosswilkers. Also find and connect with him on LinkedIn.

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