The Swiss stock market is due to spring to life soon with the much-heralded initial public offering (IPO) of E-centives, an internet direct marketing company with more than four million clients on its database. The issue is being closely watched as it marks the first IPO of a US Internet company on a stock exchange generally regarded as quite staid and old-fashioned.
E-centives, which only began producing revenues in the third quarter of 1999, having lost a hefty US$17.1m the same year, is based in Maryland but it has substantial backing from Swiss venture capitalists. The company aims to make junk mail redundant by providing online direct marketing services which allow retailers to target potential consumers through a network of partner web sites. It has 15 partners and around 200 merchants. E-centives' chief operating officer Mehrdad Akhavan estimates that US consumers receive around 543 items of unsolicited mail a year and that the response rate is about one per cent. By using the Internet, retailers can stem their direct market expenditure and increase efficiency. Direct marketing is big business in the US, with US$174 billion being spent on it each year.
E-centives has raised approximately US$50m venture capital financing to date, and with the impending IPO aims to raise a further $40.9m (SFr70m) by issuing 3.7 million shares in the target range of SFr17 to SFr19 per share. The deal is being led by Swissfirst Bank, a boutique investment house in Zurich, Geneva-based private bank Pictet is co-manager and Bank am Bellevue, another Zurich investment boutique, is group selling manager. After the IPO, E-centives will have 18 million shares on a fully diluted basis, but US Securities and Exchange regulations prevent it from saying when it might break even.
The Swiss Stock Exchange will also host the IPO of a Swiss company, Crealogix, which helps companies take advantage of the Internet. Crealogix plans to raise up to SFr70m through the issue of 347,000 shares at between SFr180 and SFr200 per share. The company more than doubled sales to SFr19.6m in the year to end-June, and net income rose from SFr1.6m to SFr4.5m.
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