Israeli start-up PowerDsine, a developer of power-over-LAN solutions for transmitting data over the power grid, will raise $72 million in its Nasdaq IPO in two weeks, at a company value of $250 million, according to the prospectus filed with the Securities and Exchange Commission (SEC). The company value includes employee options.
PowerDsine will be the first Israeli high-tech company to hold an IPO overseas this year. It plans to issue six million shares at $11-13 per share (averaging $12 per share), including 900,000 shares, worth $10.8 million, in an offer to sell by parties at interest in the company. The parties at interest also have an option to sell an additional 900,000 shares.
Citigroup (NYSE:C), Deutsche Bank (NYSE:DB; LSE:DBK; XETRA; AEX: SWXl ATX:DBKG), CIBC (NYSE:BCM; TSX:CM), and Piper Jaffray (NYSE:PJC) will be the underwriters for the issue, scheduled for the week beginning Monday, June 7, probably on June 9 or 10. PowerDsine's ticker will be PDSN.
PowerDsine, which has 115 employees, was founded in 1999 by CEO Yigal Rotem and president Ilan Attias. They will not participate in the offer to sell, which is part of the issue, and which will dilute each of their holdings in the company from 6.3% to 4.4%. Rotem and Attias each own 832,000 shares, worth an aggregate $20 million.
According to IVC, PowerDsine has raised $65 million to date and also has a $7 million credit line from , Plenus Venture Lending Fund. The company held its last financing round two years ago at a company value of $95 million.
General Electric buys 35.9%
PowerDsine's shareholders include General Electric Partners, which acquired 35.9% of the company from various venture capital funds two weeks ago; ABS Ventures (13.2%); Jerusalem Venture Partners (10.2%); IDB Holding Corp. (TASE:IDBH) (7.7%), and Bank Hapoalim (LSE:BKHD; TASE:POLI) (7.4%). Managers and employees have options reflecting a $33.5 million benefit.
The prospectus states that General Electric Partners, which invests in high-tech companies worldwide, bought the shares at $11.12 per share, for a total of $53 million. It will not participate in the offer for sale, and its stake in PowerDsine will be diluted to 25.2%. PowerDsine's second-largest shareholder, ABS Ventures is also not participating in the offer for sale, and its stake will be diluted to 11.4%.
PowerDsine estimates the IPO will boost its cash by $54.9 million, after deducting the offer for sale and underwriters' fees. It stated that it intends to invest $20 million in R&D and $12 million to expand its marketing and sales deployment. The company added that it might also use some of the proceeds to invest in or acquire synergetic companies, products, or technologies.
Although PowerDsine posted a net loss for 2003, its financial results show steadily growing revenue and shrinking losses. Sales climbed from $1 million in 1997 to $25.1 million in 2003. It posted a $1.8 million loss for 2003, compared with a loss of $6.5 million on $16.4 million revenue in 2002.
PowerDsine neared the break-even point in the first quarter of 2004: it posted a loss of just $85,000 on $8.1 million revenue, compared with a loss of $570,000 on $5.13 million revenue for the corresponding quarter of last year. The company books its employees' options as an expense, and if this factor were discounted, it would have reported a profit of $500,000 in the first quarter.
Published by Globes [online] - www.globes.co.il - on May 27, 2004