Pzena Investment Sets Terms of IPO

Pzena also reduced the size of its proposed offering to 6.1 million shares of Class A stock, from 6.4 million shares.

The New York-based company plans to use estimated net proceeds of up to approximately $107.1 million to acquire membership units held by one former employee and two outside investors, one of whom has agreed to serve as a director. The membership units will be reclassified as Class A units.

Pzena will not keep any proceeds from the offering.

The remaining 90 percent of the membership units will be held by its 23 current employees and reclassified as Class B units. Pzena said none of its employee members will sell membership units in conjunction with the IPO.

Concurrently with the IPO, Pzena will issue 57.9 million Class B shares, totaling 97.9 percent of the combined voting power of its common stock, to the continuing members of Pzena Investment Management.

As of June 30, Pzena managed accounts on behalf of over 375 institutions and individual investors and acted as sub-investment adviser for 12 mutual funds and 10 offshore funds.

The company said it has corrected material weaknesses in its internal control over financial reporting identified by its independent auditors. The errors involved accounting for stock-based compensation, liabilities associated with existing membership units, and the consolidation of investment partnerships in consolidated financial statements.

In July, Pzena Chief Executive and Co-Chief Investment Officer Rick Pzena helped defeat billionaire investor Carl Icahn's $2.9 billion buyout bid for automotive supplier Lear Corp. Pzena Investment is Lear's second-largest shareholder after Icahn.

Goldman Sachs and UBS Securities are the IPO's lead underwriters. Banc of America Securities, Fox-Pitt Kelton, JP Morgan Securities and Keefe, Bruyette & Woods are also serving as underwriters.

The underwriters have the option to purchase up to 915,000 additional shares of Class A common stock to cover any overallotments.

Pzena plans to list its shares on the New York Stock Exchange under the symbol "PZN."