Electronic software hosting and distribution company, Digital River Inc has got a secondary offering away just four months after its initial public offering. This time the company plans has raised $41.1m of new money before expenses, having raised $25.5m in August. That was less than the $40m it had hoped to raise when it filed […]
Electronic software hosting and distribution company, Digital River Inc has got a secondary offering away just four months after its initial public offering. This time the company plans has raised $41.1m of new money before expenses, having raised $25.5m in August. That was less than the $40m it had hoped to raise when it filed in June, as it scaled back its offering shortly before the shares started trading. The Minneapolis, Minnesota company is going back to the well so soon because the market conditions are ripe for it, says company president Perry Steiner, who also has broad financial responsibilities at the company. The market for IPOs in mid-August was already developing into one of the worst for decades. Digital River got away August 11, shortly before a month-long hiatus when there were no IPOs in the US whatsoever, which ended with eBay Inc’s debut on September 24. Steiner emphasizes that the firm does not need the money right now, it’s just a good time to raise it. He says it will be used for further technical development as well as for working capital. He says that the company is in a quiet period and therefore he could not be more specific. As of September the company had $19.4m in cash and $8.8m in short tern investments. Digital River hosts software from many top software publishers at its data center, including IBM Corp’s Lotus, Symantec Corp and Adobe Systems Inc and distributes the software over the internet when customers require it, taking a percentage for itself, but charging the companies nothing to host the software. It also hosts software for about 1,000 resellers, providing back-end distribution for them online. Steiner says the company has spent a lot of time over the past few months meeting with investment bankers and the like raising the profile of the company, which didn’t have the name-recognition that many of the other internet IPOs have enjoyed this year. In addition to the 1.75 million new shares being offered by the company at $23.50 per share, existing shareholders are selling an additional 1.25 million shares which will net them $29.4m before expenses. Digital River’s stock plunged straight after its offering, hitting a low of $5 at the start of September, but climbed sharply through November to a high of $32. They closed yesterday down $2.8125, or 11.0% at $22.75 as these new shares hit the market.