Cable Giant Charter’s IPO Raises $3.23 Billion

Charter Communications Inc., the cable-TV operator founded by Paul Allen, raised $3.23 billion Monday in the nation’s second-biggest initial stock sale ever.

St. Louis-based Charter (ticker symbol: CHTR), whose stock will start trading today on Nasdaq, sold 170 million shares at $19 each, the top of the expected range set by lead underwriter Goldman Sachs Group Inc.

But Charter, whose IPO trails only Conoco Inc.’s $4-billion deal in 1998, could see its deal quickly bumped to No. 3 in size. Atlanta-based United Parcel Service (UPS) is expected to raise about $5 billion in its mammoth offering, due as early as today.

Billionaire Allen, the 46-year-old bachelor who co-founded Microsoft Corp. with Bill Gates, is turning to the public markets to pay down debt and finance part of the $13-billion in cable acquisitions Charter has announced this year.

Investors are betting on Allen’s vision of a future in which cable lines will be the chief pipeline into homes and businesses for new communications services such as interactive TV and high-speed Internet access.

“The perception by the public is that Paul Allen is smart money, and people are taking it as a sign of assurance that there’s some serious upside to this deal,” said Ben Holmes, president of IpoPros.com, a Boulder, Colo.-based research firm that specializes in initial public offerings.

Some analysts said the Charter offering could set the stage for a new round of the kind of big acquisitions that have characterized the cable industry this year.

“Within 12 to 18 months, Charter could potentially make a run at a larger cable company,” CIBC World Markets analyst Aryeh Bourkoff said, pointing to Comcast Corp. and Adelphia Communications Corp. as possible targets.

“But that’s clearly predicated on an increase in Charter’s market value.”

With its pending acquisitions, Charter, now the nation’s fourth-largest cable operator, will have an estimated 6.2 million customers.