RetailMeNot IPO a Score for Austin Ventures, Norwest

Shares of digital coupon provider RetailMeNot soared in first-day trading Friday, delivering a big return for venture backers, including the company’s two largest stakeholders, Austin Ventures and Norwest Venture Partners.

The Austin-based company priced shares at $21 apiece on Thursday, the midpoint of the projected range. Shares were up more than 30% in midday trading Friday, valuing the company at about $1.3 billion.

The offering stands to provide the largest gains for venture investors, who own the vast majority of Retailmenot shares. Their holdings are as follows:

• Austin Ventures is the largest stakeholder, with 14.5 million shares, or a 31.8% pre-IPO stake. It sold $1.78 million shares in the offering, netting about $37 million. Remaining shares were valued around $350 million, based on midday share trading prices.

• Norwest Venture Partners had a 20.5% pre-IPO stake. The firm sold 1.15 million shares in the offering, netting about $24 million. Remaining shares were valued around $220 million.

• J.P. Morgan has about 3.5 million shares, valued around $95 million.

•  Institutional Venture Partners has about 3.2 million shares, valued around $86 million.

•  Adams Street Partners had about 2.8 million shares. The firm sold 253,000 in the offering, netting about $5.3 million. Remaining shares are worth about $69 million.

•  Google Ventures had about 2.3 million shares. It sold 287,000 in the offering, bringing in about $6 million. Remaining shares are worth about $55 million.

RetailMeNot started out as WhaleShark Media, a startup focused on the online coupon space and funded with $87 million from investors including Austin Ventures, Norwest and Adams Street. WhaleShark made a number of acquisitions, including one in 2010 of online coupon provider RetailMeNot, which eventually became the name of the combined company. Between 2010 and 2012, RetailMeNot raised at least $265 million from venture investors, according to Thomson Reuters.

The company, which connects consumers and retailers, offers digital coupons for everything from clothing, electronics, travel, food and entertainment to personal and business services from over 60,000 retailers and brands.

Earnings have been growing briskly. The company, which listed Google, Yahoo and Facebook as rivals, said its annual revenue rose nearly eightfold to $144.7 million between 2010 and 2012. RetailMeNot said it earned net income of $26 million in 2012.

Morgan Stanley, Goldman, Sachs and Credit Suisse Securities were the lead underwriters for the offering.

Reuters contributed to this report.

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