Zipcar Inc., the car-sharing company that rents vehicles by the hour, surged 56 percent on its first day of trading after an expanded initial public offering.
The company, based in Cambridge, Massachusetts, raised $174.3 million in its IPO yesterday, after increasing the shares and pricing them above the range. The shares advanced $10 to $28 as of 4 p.m. in Nasdaq Stock Market composite trading, after climbing as much as 75 percent to $31.50.
Zipcar and Arcos Dorados Holdings Inc., the Buenos Aires-based operator of McDonald’s Corp. restaurants in Latin America and the Caribbean, expanded their IPOs yesterday to meet demand. Seven companies were slated to raise at least $1.89 billion in U.S. initial offerings this week, the busiest for new-stock sales in the country in more than two months.
“You don’t get that kind of first-day gain unless people are betting on the growth,” said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York. “Anyone who is paying up for it has to be saying that they believe the concept is movable and can be duplicated in markets well beyond the small imprint they have so far.”
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The car-rental service operates in 14 metropolitan areas, including London, and has more than 8,000 cars. It plans to expand in the U.S. and international markets including Europe, according to the filing. The company’s net loss in 2010 widened to $14.1 million from $4.67 million a year earlier, the filing showed, while revenue increased 42 percent to $186.1 million in the same period.
Today’s trading gives Zipcar a market value of as much as $1.21 billion, according to data compiled by Bloomberg. That’s 6.5 times last year’s sales, more than seven times higher than the multiple of about 0.9 for Park Ridge, New Jersey-based Hertz Global Holdings Inc., which has car-sharing services in the U.S. and Europe and is named as a competitor in Zipcar’s filing.
Zipcar sold 9.7 million shares at $18 each, according to a company statement. It had offered 8.3 million shares at $14 to $16 apiece, according to a filing with the U.S. Securities and Exchange Commission. Proceeds will be used to reduce debt and expand internationally, the filing showed.
The offering was led by New York-based Goldman Sachs Group Inc. and JPMorgan Chase & Co. Zipcar’s owners include venture capital firms Greylock Partners, Benchmark Capital, Smedvig Capital Ltd. and Revolution LLC, the fund started by America Online Inc. co-founder Steve Case, according to the prospectus.
Arcos Dorados raised $1.25 billion, 33 percent more than it sought, selling 73.5 million shares at $17 each after offering 62.5 million for $13 to $15 apiece, according to a company statement and a share-sale filing. The deal received more than 10 times more orders than the amount of stock being offered, a person with knowledge of the situation said.
Arcos, which operates 1,755 McDonald’s locations, will use $150 million of the share sale’s proceeds to open new outlets and remodel existing ones, according to its prospectus.
The sale was led by Bank of America Corp., based in Charlotte, North Carolina; JPMorgan, Morgan Stanley and Citigroup Inc. of New York; and Sao Paulo-based Itau Unibanco Holding SA.
Box Ships Inc., the Athens-based company that plans to buy container ships, reduced its U.S. IPO by 22 percent, selling 11 million shares for $12 apiece after offering 10 million shares for as much as $17 each, according to its SEC filing and data compiled by Bloomberg.
UBS AG of Zurich and Morgan Stanley led the offering.
TMS International Corp., the provider of outsourcing services to steelmakers, raised $145.6 million in its offering. The Glassport, Pennsylvania-based company received 31 percent less than it sought, data compiled by Bloomberg show, pricing 11.2 million shares at $13 each after marketing 12.5 million for $15 to $17.
Bank of America, Zurich-based Credit Suisse Group AG and JPMorgan led the offering by TMS International.