Angie’s List Surges After Pricing Shares at Top of Range in Initial Offer
Angie’s List Inc., the consumer- review website with more than 1 million paying members, surged 25 percent in its trading debut after raising $114 million in an initial public offering.
Trading on the Nasdaq Stock Market under the symbol ANGI, Angie’s List climbed to $16.26 as of 4 p.m. New York time. The Indianapolis-based company sold 8.8 million shares, about 16 percent of its outstanding stock, for $13 apiece, the top of the proposed range.
Angie’s List, which provides reviews of plumbers, electricians and other service providers, follows the success of Internet peer Groupon Inc.’s IPO this month. The Chicago-based online-coupon leader raised $700 million Nov. 3, 30 percent more than it sought, after pricing the shares above the marketed range. The stock surged 31 percent in its trading debut and had gained 20 percent since the IPO as of yesterday.
“The market for entering IPOs appears to be cracking back open,” said Colin Sebastian, an analyst at Robert W. Baird & Co. in San Francisco. “This is a good first day for a smaller- scale IPO, and that could give other companies confidence.” Yelp Inc., a fellow consumer-review site operator, filed today to raise $100 million in an IPO.
The IPO price valued Angie’s List at more than $900 million million, or about 11 times sales in the 12 months through September. That compares with Google Inc., which trades at about 5.4 times trailing 12-month sales and is named as a competitor in the Angie’s List filing. Groupon, also named as competition, trades at about 12 times sales in the same period.
Groupon sold 35 million shares at $20 each. Its stock soared 31 percent to $26.11 on its first day of trading on Nov. 4. The gains reflected rising optimism concerning IPOs after market volatility earlier this year persuaded many startups to delay initial share sales, resulting in the biggest IPO backlog since 2000.
Delphi Automotive Plc, the former auto-parts unit of General Motors Co. (GM), also completed an IPO yesterday, raising $530 million after pricing at the lower end of its proposed range.
Revenue at Angie’s List increased 46 percent to $62.6 million in the nine months ended Sept. 30 compared with the year-earlier period, the filing shows. Its net loss widened to $43.2 million from about $19 million.
The company planned to sell about 6.3 million shares in the offering, with the remaining 2.5 million sold by existing shareholders, according to the prospectus. Battery Ventures had planned to reduce its stake to 15 percent from 18 percent, while BV Capital was paring its stake to 9.3 percent from 12 percent.
The site was started in 1995 by Angie Hicks, who was the company’s president until 1998, when she took a leave of absence to get a master’s in business administration from Harvard University. Hicks, now chief marketing officer, intended to trim her stake to 1.5 percent from 1.8 percent, the filing shows.
Angie’s List establishes new markets by offering free memberships, according to its prospectus, and begins charging fees usually within 24 months. The company had 175 paid markets as of Sept. 30, compared with 45 in January 2008.
In New York City, Angie’s List memberships cost from $3.25 to $5.20 monthly or $29 to $46.40 a year, according to the website. The company has also offered promotional discounts in partnership with Groupon. Cheryl Reed, a spokeswoman for Angie’s List, didn’t immediately return phone calls seeking information about the company’s pricing plans.
Angie’s List plans to use net proceeds from the offering to fund advertising and increase membership, the filing shows. Bank of America Corp. (BAC) led the offering.
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