This Friday, Bankrate expects to raise up to $320 million in an initial public offering. But the prospect of its IPO has elicited a giant shrug from Wall Street, says John Fitzgibbon, founder of the independent research firm IPO Scoop.
Bankrate runs numerous personal finance Websites, and while the company posted a profit of $20 million in 2009, it lost $39 million last year — though Fitzgibbon doesn’t think the loss explains a lack of enthusiasm around the offering.
A bigger problem, he says, is simply that it’s “been there before.” (The company was bought out in 2009 by its own management, along with Apax Partners, in a controversial take-private deal that valued the company at $571 million.)
“Coming out of private equity is sometimes good,” says Fitzgibbon, referring to the highly successful IPOs of consumer research firm Nielsen Holdings and pipeline company Kinder Morgan, among the 200-plus other PE-backed exits that are now valued at north of $85 billion.
“Sometimes, it’s not so good, though,” he adds.
In the case of Bankrate, potential investors may see the company as the “old, underperforming” Bankrate combined with two new businesses (NetQuote and Credit Cards) that Apax acquired for the business last year, as the New York Times reported back in April. Said the Times: “This is really just a roll-up I.P.O. orchestrated by Apax.”
The charm factor may also be playing a role. As Fitzgibbon observes, “Bankrate just doesn’t have the charisma that Pandora has. I’m hearing it’s covered – that they have enough investors to cover the 20 million shares they are offering [at a price range of between $14 and $16]. But its story is well-known. It’s been out there for decades. Meanwhile, Pandora is taking a lot of lightening out of the sky right now.”
Bankrate’s offering – assuming all goes as planned – will still value the North Palm Beach, Fla. company at about $1.6 billion. That’s good news for Apax, which will continue to control more than 50 percent of Bankrate after the offering. As for new investors coming to the offering? They’d be wise to keep their expectations in check.
“I’ll tell you,” says Fitzgibbon. “It’s hard to put a finger on something when it just doesn’t crackle. But I’ve been around the horn with people, asking about the offering, and all I get is a yawn.”