After many misadventures, the IPO of Benjamin and Daniel Steinmetz's online jewelry company Odimo reached the finishing line yesterday. After the close of trading on Nasdaq, the company raised $28.1 million in an issue of 3.125 million shares at $9 each. The issue price was at the low end of the projected $9-10 price range. The flotation implies a market cap for the company of $65 million.
The company originally hoped to raise $37.5 million, at a price of $12 per share and a $86 million valuation. The readiness of the company and its underwriters to lower the share price as much as necessary in order to raise funds shows how much Odimo needs the cash.
The underwriters, CIBC World Markets, Oppenheimer & Co. Inc., and Merriman Curhan Ford, received an option to buy a further 468.75 thousand shares from the company. If they exercise this option, the gross amount raised will grow by $4.2 million to $32.3 million. Odimo will pocket a net $24 million, approximately. About $9.3 million of this will be used to repay bank debt. The rest will be invested in stock, in upgrading the company's Internet sites, and in marketing activities.
The flotation dilutes the Steinmetz brothers' stake in Odimo from 39.1% to 22.1% (worth about $14 million), while Softbank Capital Partners' stake is diluted from 21.1% to 11.9%. GSI Commerce Solutions Inc. remains with 11.5%, while Odimo CEO Alan Lipton remains with 5.7% (worth about $3.7 million). Some of the shareholders had planned to sell some of their holdings in the flotation process, but withdrew because of the low demand for the shares at the pricing stage. Odimo shares will be listed for trading today under the symbol ODMO.
Odimo operates three sites for trading in luxury goods. It was founded in 1998. In the six years since then it has accumulated losses of some $67 million, and it has less than $1 million cash. Odimo has not recorded a single profitable quarter. In the first nine months of 2004, it lost $24.5 million on revenue of $30.7 million.
Published by Globes [online], Israel business news - www.globes.co.il - on February 15, 2005