Blackstone margins stake in Legence after IPO
Blackstone Group has taken a margin loan on its equity stake in Legence just two months after taking the engineering and construction advisory firm public via a US$728m all-primary Nasdaq IPO.
The US$650m loan is backed by all the 75.7m Legence shares Blackstone still owns that are valued at US$3.1bn, putting the loan-to-value at about 20%, the alternative asset manager revealed in a securities filing.
Legence’s shares rose 7.4% on Monday following the filing to US$43.79, extending gains from the US$28.00 pricing on its IPO in September to 56.4%.
The margin loan is a creative way to return capital to limited partners without impacting ownership, and comes within the 180-day IPO lockup.
Legence sold 29.5m shares on the IPO at US$28.00, the upper half of the US$25–$29 marketing range including partial exercise of the greenshoe. The all-primary offering, which was restructured post-launch with an entirely primary greenshoe, after initially being a 50:50 primary/secondary split, allowed the company to reduce net leverage to 3.4x Ebitda.
Goldman Sachs, lead-left on the IPO alongside joint lead books Jefferies, acted as placement agent on the margin loan.
Legence earlier this month reported Q3 results, its first as a public company, that saw it generate US$88.8m of adjusted Ebitda as revenue grew by 26.2% to US$708m. It also introduced both Q4 and full year 2026 Ebitda guidance of US$60m–$65m and US$600m–$630m and revenue projections of US$295m–$315m and US$2.65bn–$2.85bn.
With additional debt repayment post-IPO net leverage dropped to 2.7x.
Legence used that debt capacity to make three acquisitions, led by the US$475m cash-and-stock purchase of Bowers Group that also carries a US$50m deferred payout.
“Legence’s positive Q3 results featured standout organic growth and a sizable acquisition that came quarters (maybe years) earlier than what we would have expected,” wrote Barclays’ analysts in a note to clients. “Ultimately though the market wants to see Legence grow, the strong (inspection & maintenance) growth furthers the (Comfort Systems)-like story that bulls want to underwrite.”
Legence used the now inflated 16.8x forward multiple of EV/Ebitda valuation to fold in Bowers purchased at a 6x multiple.
The margin loan suggests Blackstone is not a seller and in fact may be committed for the longer term. At some point, perhaps in March 2026 when the IPO lockup expires, the firm will be a motivated seller, but for now that consideration is on the margin.