Yesterday, Ituran (TASE: ITRN), controlled by the Sheratzky family, completed an issue of shares on the Nasdaq market, raising $62.4 million at a company value of $294 million. The share price for the issue closed at $13, towards the lower end of the $12.5-14.5 price range at which the company planned to make the flotation.
The company, which provides vehicle location services, issued 4.8 million shares, of which 3.84 million were new shares and 960,000 were issued in an offer for sale by existing shareholders, netting the Sheratzky, Kurz, and Kahane families some $12.5 million.
UBS acted as the sole book-running manager of the offering. JP Morgan was joint lead manager. William Blair & Company and C.E. Unterberg, Towbin were co-managers.
The underwriters received a 30-day option to purchase up to an additional 720,000 ordinary shares, worth some $10 million, to cover over-allotments
Sources close to Ituran said today that the fact that the issue did not close at the maximum price served the interests of the shareholders as a whole, since over-pricing would have led to falls in the share price later. Ituran perhaps prefers to raise a few million dollars less at the flotation stage, if it means that US investors who bought shares will be satisfied with the stock's performance in the future, and will enable the company to strike roots in the US capital market.
On the other hand, it is possible to understand why the US market might be a little suspicious of Ituran. First of all, it has already come across several Israeli companies that made IPOs and then immediately reported poor results that depressed the share price. Secondly, Ituran's second quarter financials, on the basis of which the flotation took place, included one-time items that hurt the company's results.
Published by Globes [online], Israel business news - www.globes.co.il - on September 28, 2005