HomeGrocer.com, the Amazon.com-backed online supermarket, raised some $245 million in an initial public offering today.
The Kirkland, Wash.-based company priced its stock at $12 per share, at the top of its previously set range. HomeGrocer sold 22 million shares of stock, grossing some $264 million before expenses.
The 22 million shares represent 17.6 percent of HomeGrocer, giving the company a valuation of $1.5 billion before it begins trading tomorrow. HomeGrocer shares will go public on Nasdaq tomorrow under the ticker symbol "HOMG."
HomeGrocer's public offering comes during a bear market for e-tail shares. E-commerce bellwethers eBay and Amazon.com are down 15 percent and 35 percent, respectively, from their 52-week highs. After a successful debut, HomeGrocer rival Webvan's shares sunk in January and have remained mired below their IPO price for months, along with the shares of fellow online grocer Peapod.
In recent months, investors have turned away from e-tail stocks to seemingly hotter sectors such as business-to-business e-commerce. And that could spell trouble for HomeGrocer's IPO, analysts say.
Indeed, Pets.com's own relationship with e-commerce leader Amazon was not enough to buoy its IPO last month. On the San Francisco-based company's
first day of trading, its shares closed unchanged from its IPO price of $12 and have since sunk below it, closing today at $8.53 a share.
"Investors have been rotating out of retail e-commerce, and they are not going to rotate back in," Keenan Vision financial analyst Vern Keenan said. "HomeGrocer's IPO is going to suck just as big as Webvan."
HomeGrocer plans to use the proceeds of its stock sale to fund its national expansion and to pay for "general corporate purposes," according to regulatory documents filed with the Securities and Exchange Commission. HomeGrocer currently operates in Seattle; Portland, Ore.; Los Angeles and Orange County, Calif. According to the filings, the company plans to expand into eight to ten new markets this year, including Dallas, San Diego, Atlanta, southern Connecticut and the San Francisco Bay area.
The expansion would bring Homegrocer into direct competition with Webvan for the first time. Webvan currently operates in the San Francisco area and is planning to move into Atlanta later this year.
HomeGrocer lost $84 million on $21.6 million in revenue last year. The company lost $7.9 million on $1.1 million in revenue in 1998.
Amazon now owns 22.2 percent of HomeGrocer, down from 27 percent of the company prior to the offering. Venture capital firms Kleiner Perkins Caulfield & Byers and Hummer Winblad Venture Partners saw their stakes in HomeGrocer drop to 11.1 percent and 11 percent from 13.5 percent and 13.3 percent, respectively.
Other investors include HomeGrocer co-founder Terry Drayton, who owns a 5 percent stake in the company after the offering; company chief executive Mary Alice Taylor, who owns 4.8 percent; and Jim Barksdale's The Barksdale Group, which owns 4.8 percent.