Mobileye Record IPO Defeats Global Selloff as Shares Soar
Mobileye NV (MBLY), which makes software to avoid car accidents, overcame the worst global stock-market selloff in almost five months to raise $890 million last week, a record for an Israeli company going public in the U.S.
The shares soared 48 percent to $37 in New York on their first day of trading on Aug. 1 after the company and existing shareholders sold 35.6 million shares for $25 each, according to a Mobileye statement. That was above the high end of the $21 to $23 marketed range.
The Jerusalem-based company weathered the biggest rout in global equities since March and a weekly drop of 1.8 percent in the Bloomberg Israel-US Equity Index. Mobileye commanded more money from investors while only three of four Israeli biotechnology firms completed planned initial public offerings last week, with all either downsizing or pricing below their target range.
“Some of these IPOs which are in special industries are trading in their own world,” Josef Schuster, the founder of IPOX Schuster LLC in Chicago, said by phone Aug. 1. “In the last week or two you have seen some of the IPO stocks really trading independently of the market.”
Sharron Silvers, a New York-based spokeswoman for Mobileye, declined via e-mail to comment on the trading.
The company, which counts luxury electric-carmaker Tesla Motors Inc. as a customer, posted 2013 net income of $19.9 million following two years of losses, according to the prospectus. Revenue in 2013 was $81.2 million, more than double the figure from 2012.
Mobileye rallied after boosting its deal because investors see it as a high-growth technology company with proven sales within the auto industry, said Brian Krawez, who oversees $3 billion at Scotts Valley, California-based Scharf Investments LLC.
“A lot of tech companies that don’t make a lot of money such as Mobileye and Tesla that have high revenue growth, tend to get really high valuations,” Krawez said by phone Aug. 1. “To justify this valuation, the company has to hit a huge home run.”
The MSCI All-Country World Index slid 2.4 percent last week as Mobileye completed its stock offering. Stocks tumbled after companies from Exxon Mobil Corp. to Samsung Electronics Co. reported results that disappointed investors, Argentina defaulted and Banco Espirito Santo SA in Portugal was ordered to raise capital.
Mapi Pharma Ltd. (MAPI), which makes treatments for multiple sclerosis, postponed plans to raise $18 million in an IPO last week, according to data compiled by Bloomberg. Vascular Biogenics Ltd., which develops cancer drugs, raised $64.8 million, selling 5.4 million shares for $12 a share, below the marketed price range of $13 to $15, according to a regulatory filing. MacroCure Ltd. (MCUR) and Bio Blast Pharma Ltd. also raised less than planned.
“There’s a difference between a hot market where you can do anything, and a smart market that says, is there a catalyst behind this, is there an unmet medical need?” Jason Kolbert, an analyst at Maxim Group LLC in New York, said by phone Aug. 1. “The market is beginning to differentiate between just anything, which is where we were in January to March, to selective.”
Mobileye’s IPO was the 10th-largest in the U.S. this year and surpassed Partner Communication Ltd.’s share sale of $525 million in October 1999 to become the biggest by an Israeli company in the U.S.
Founded by Hebrew University professor Amnon Shashua and Ziv Aviram 15 years ago, Mobileye makes a chip and a system that alert drivers to pedestrians and unintended lane departures. The company’s products will help enable hands-free driving on the highway by 2016, according to the filing.
As of March 31, Mobileye’s technology was installed in about 3.3 million cars made by manufacturers from Honda Motor Co. to Tesla, the company estimates. Mobileye’s software is distributed through auto-parts suppliers such as TRW Automotive Holdings Corp. (TRW) and Delphi Automotive Plc.
The record deal size represents a new wave of Israeli startups that are turning down strategic partnerships and acquisition offers to grow independently, said Adam Fisher, a partner in the Herzliya, Israel-based office of Bessemer Venture Partners.
“The companies we back seem to be more ambitious than ever before, much bigger markets, they don’t sell out as early,” Fisher, who isn’t an investor in Mobileye, said by phone on July 28. “It’s a new breed of Israeli tech that’s different from the tech of the 90’s.”
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