Net incubator prices its delayed IPO
After slashing the size of its initial public offering and delaying it three times, Divine InterVentures finally prices shares at the bottom of the expected range.
Lisle, Ill.-based Divine, which funds and manages mostly online business-to-business start-ups, sold 14.2 million shares at $9 each in an initial stock sale, raising $128 million. The shares are expected to begin trading tomorrow on the Nasdaq under the ticker "DVIN." Robertson Stephens handled the sale.
Divine had originally planned its IPO for the end of June. The sale was delayed to last Friday, which was later rescheduled for yesterday and finally priced today.
Divine's first day of trading tomorrow will follow today's three semiconductor IPOs, which showed little returns despite investor enthusiasm about the chip industry. ASAT Holdings closed at $11, $1 below its $12 offering price; Entegris closed up 19 cents at $11.19 and Axcelis Technologies rose $1.94, or 8.8 percent, to $23.94. Analysts had expected a stronger performance.
Meanwhile, shares of Turkey-based cellular phone company Turkcell, which also held its IPO today, closed at $17.62, two cents above its initial price of $17.60.
Shares of CMGI, a competitor of Divine InterVentures, dropped $2.50 to close at $36.50, well below their 52-week high of $163.50.
"It's a difficult time period to take a company like Divine public," said Steven Frankel, managing director of Boston-based Adams Harkness & Hill. "It's very hard to get investors excited about a company whose end product is more IPOs."
In addition to its three delays, Divine has changed the terms of its offering in at least three other ways since December. The company cut the number of shares offered to 14 million from 50 million. It also lowered its pricing range by $4, and it replaced underwriter Credit Suisse First Boston with Robertson Stephens after the investment bank proposed delaying the IPO until this fall.
Divine's frequent tuning of its IPO could be attributed to the pressure to go public by July 29. But selling shares to the public by that date, and raising at least $120 million, the company stands to receive an additional $220 million in a private placement from investors including Microsoft and Hewlett-Packard, said Paul Bard, an analyst with Renaissance Capital.
"That private placement is not valid unless they complete the offering by the end of the month," Bard said. The company "might be saying, 'OK, let's take whatever capital we can.'"
Divine, formed in May 1999, consists of 52 business-to-business e-commerce companies, 15 of which are located within Divine's offices.