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Net incubator delays IPO for third time

Divine InterVentures postpones its initial public offering yet again. Will the fourth time be the charm?

    Divine InterVentures may be hoping for some form of intervention--divine or otherwise.

    Today, the Internet holding company postponed its initial public offering for the third time. It had originally planned its offering before the end of June. That was changed to last Friday, which was rescheduled for today.

    The company, which funds mostly business-to-business start-ups, now plans to sell 14.2 million shares at a range of $9 to $10 tomorrow, according to underwriters Robertson Stephens.

    In addition to the delays, Lisle, Ill.-based Divine has changed the terms of its offering in at least three other ways since December. The company cut the number of shares offered down from 50 million. It lowered its pricing range by $4. And it replaced underwriter Credit Suisse First Boston with Robertson Stephens, after the bank proposed holding the IPO until this fall.

    Divine's frequent tuning of its IPO could be attributed to the pressure to complete by July 29 an IPO that raises at least $120 million. If Divine meets these guidelines, it 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. Payments from member companies, along with consulting fees and venture management fees, contribute to the company's revenues.

    Divine reported $5.3 million in revenues in the first quarter of 2000 and a loss of $77.4 million.

    The company funds mostly business-to-business (B2B) growth companies, not a current favorite among investors.

    "People are a little more wary of the prospects of these smaller B2B start-ups," Bard said. "It's difficult to value the portfolio of investments that they have. (The stock's price) is really going to be driven by what the institutional investors are willing to pay."

    Shares of CMGI, an incubator firm similar to Divine, have fallen 71 percent this year, and shares of Internet Capital are down 82 percent for the year.

    If and when Divine's IPO does take place, the shares will trade on the Nasdaq under the ticker symbol "DVIN."