Morgan, Olmstead Plans Public Offering

Morgan, Olmstead, Kennedy & Gardner, a fast-growing Los Angeles stock brokerage, filed Monday for an initial public stock offering, thus joining a growing list of investment firms that have gone public in recent months.

The offering, expected to raise between $7.5 million and $8.5 million, will give public shareholders about a 35% stake in the firm. The offering, planned for late June, will include a new issue of 1 million shares and 216,000 shares to be sold by current shareholders, according to the firm’s filing with the Securities and Exchange Commission.

The public offering is needed for Morgan, Olmstead to remain competitive in the growing Los Angeles financial market, company officials and other experts said.

“It’s a sign of the times. If you want to stay in business, you need money,” said the head of a Los Angeles firm that places executives at local brokerage houses.

Morgan, Olmstead executives in the past have resisted suggestions to go public or be acquired by a larger firm. But several New York investment firms--including Morgan Stanley & Co. and Bear, Stearns & Co.--have expanded their operations here in the past year, while others, such as L. F. Rothschild, Unterberg, Towbin, are said to be planning to set up shop locally.

“This is an opportune time to raise permanent capital for the firm,” Morgan, Olmstead President Bryan L. Herrmann said. “Due to our expansion, we see the need for additional capital.”

Other investment firms making initial public offerings recently include Morgan Stanley, Bear, Stearns and L. F. Rothschild. General Electric recently agreed to acquire 80% of Kidder, Peabody & Co. in a move to give Kidder greater access to capital.

Morgan, Olmstead’s offering will leave only a handful of major brokerage firms in Los Angeles without public stock ownership. Among the still-private firms are Crowell, Weedon & Co. and Wedbush, Noble, Cooke.

Morgan, Olmstead has been expanding in recent months in investment banking as well as in institutional and retail brokerage. However, it remains smaller than other Los Angeles-based brokerages such as Jefferies & Co. and Bateman Eichler, Hill Richards.

Morgan, Olmstead earned $1.018 million in 1985 on revenue of $43.5 million, double its revenue three years earlier.

G. Tilton Gardner, the firm’s chairman and chief executive, currently is its largest shareholder, with about a 20% stake. That will shrink to about 13% after the public offering.