BEHIND THE NEWS: 2 tech firms planning IPOs get curveball from markets

March 31, 2008

Aprimo Inc. and ExactTarget Inc. haven't had to weather the recent stock-market turmoil. Not directly, at least.

But the two Indianapolis software companies-which filed plans for IPOs last fall, when markets were comparatively serene-surely would have made their public debuts by now if conditions had remained favorable.

Lately, they've been anything but. The tech-heavy NASDAQ Composite is off 12 percent in the year. And the volatility of the Dow Jones industrial average is enough to make anyone queasy. One day, investors fret over the credit crunch and slumping economy and knock 300 points off the index; the next day, it surges back 200.

Company officials plotting IPOs tend to be tight-lipped because they don't want to run afoul of Securities and Exchange Commission "quiet period" rules. An Aprimo executive did not return calls, while an ExactTarget executive declined to comment.

But virtually the only companies completing IPOs in this stormy market are those that need to raise money now for specific business reasons, said David Menlow, president of IPOFinancial.comin Millburn, N.J.

He said those companies are having to sell their shares for lower prices than insiders had hoped.

"There are going to be companies coming public, but they are going to be very, very few in number until there is light at the end of the tunnel," he said.

Indeed, just 18 U.S. firms have launched IPOs this year. That compares with 38 through this point last year and 45 at this point in 2006.

Aprimo, a maker of marketingautomation software, filed plans in September to raise $50 million in an IPO; it submitted an amended filing in November. ExactTarget-a maker of software that helps clients create, target and deliver permission-based emails-rolled out plans in December to raise $86 million. It last amended its filing Feb. 5.

Investor Bob Compton, who provided early financial backing to both companies and serves as chairman of Exact-Target's board, would not discuss either firm's plans.

But he's hopeful markets will gain stability over the next month. He said Federal Reserve Chairman Ben Bernanke took a big step toward rebuilding investor confidence with his decisive handling of the Bear Stearns Cos. crisis. The Fed engineered the investment firm's sale to JP Morgan Chase and agreed to cover $30 billion in potential losses.

"As far as I'm aware of, companies in the quiet period for public offerings across the country are all still moving ahead, but perhaps more slowly than anticipated," Compton said. "You want to go out when there is more certainty with investors."

Indianapolis' tech community has more than a passing interest in seeing the offerings succeed. The city has just one major publicly traded software firm-Interactive Intelligence. Tech leaders say another two would be a boon to Indianapolis' burgeoning IT sector.

But there are no guarantees. Executives work for months or years to polish up their companies for successful IPOs. When Aprimo and Exact-Target filed their plans, timing seemed ideal. Both were solidly profitable and growing explosively. Aprimo had quadrupled revenue since 2002, and ExactTarget had reported 27 straight quarters of rising revenue.

Neither company has filed financials showing fourth-quarter performance. They still might be on a tear. But being in the marketing business could make them vulnerable to a stumble. In tough times, companies often trim marketing expenditures, even though that's when those investments often make the most sense.

Real estate revival

Simon Property Group Inc. shares tumbled early this year, but now have roared back.

Stock in the Indianapolis-based shopping mall developer has shot up 26 percent since hitting a 52-week low of $74.80 Jan. 22. Shares now fetch $94.30, up nearly 10 percent for the year.

Long-term holders hope there's still more oomph in the shares. Even with the surge, they're trading well off their all-time high of $118.25 reached in April 2007.

Indianapolis' other publicly traded real estate companies also have rallied off January lows. Retail developer Kite Realty Group Trust now trades for $15.05, up from $11.50. Duke Realty Corp., an office and industrial developer, trades for $23.91, up from $20.50.

Concerns that the slumping economy would drag down real estate companies pummeled the sector early this year. More recently, real estate stocks have gotten a boost from the Fed's interest-rate-cutting campaign, which helps reduce their borrowing costs.
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