Zipcar IPO: Everything You Need to Know

  • 04 Apr 2011 3:44 PM
    Message # 564088
    Anonymous

    Zipcar unveiled the terms of its initial public offering, which has been sitting on the shelf since it first filed for an IPO last year.  The company set a preliminary price for its IPO at $14 to $16. At the upper end of that range, the IPO could raise $133.3 million for Zipcar and its investors.

    There’s a lot of heady talk in the IPO registration documents – quotes from Henry Ford, for example, about the democratizing aspects of the car. But Zipcar also acknowledges that it doesn’t turn a profit and is facing stiff competition

    Goldman Sachs and J.P. Morgan are leading the IPO, with Cowen & Co., Needham & Co. and Oppenheimer also working as underwriters.

    Here are a few quick data points from the IPO filing.

    About Zipcar

    Zipcar said it has 560,000 members, which is says are called “Zipsters.” Zipcar, for those people not familiar with the service, lets its members rent cars for the hour or by the day. The company says it operates in 14 metropolitan areas and more than 230 U.S. colleges.

    Finances

    The company said it pulled in $186.1 million in revenue last year, up about 42% from the prior year. The company’s rate of revenue growth was 23% from 2009 to 2008, according to its IPO registration materials. Zipcar hasn’t turned a profit from operations in 2008, 2009 or 2010.

    “We do not know if our business operations will become profitable or if we will continue to incur net losses in 2012 and beyond,” Zipcar said. (The company does say it had positive cash flow from operations in 2009 and last year, even as it continued to borrow money.)

    Biggest investors:

    Revolution, the investment firm of former AOL honcho Steve Case, owns more than 21% of Zipcar’s stock. Benchmark Capital Partners, Greylock Partners and Norway’s Smedvig Capital AS each own more than 5% of Zipcar’s stock

    What Will Zipcar Do with the Money?

    Zipcar, which could pull into roughly $107 million at the top end of the IPO price range, said it plans to use proceeds from the IPO to pay down debt, including from its recent acquisition of a U.K. car sharing company called Streetcar, and to expand its business.

    Goldman conflicts?

    Affiliates of Goldman Sachs, which is among the lead underwriters for Zipcar’s IPO, own some securities in a Zipcar affiliate. Because of this, Zipcar says Goldman Sachs may receive more than 5% of net proceeds from the IPO.

    The Henry Ford quote

    Deal Journal doesn’t see Henry Ford pop up in many IPO documents. But Zipcar uses the auto pioneer to burnish the philosophy of cars for everyone.

    “I will build a car for the great multitude. It will be large enough for the family, but small enough for the individual to run and care for. It will be constructed of the best materials, by the best men to be hired, after the simplest designs that modern engineering can devise. But it will be so low in price that no man making a good salary will be unable to own oneundefinedand enjoy with his family the blessing of hours of pleasure in God’s great open spaces.”

 

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