Will third time be the charm for LetsBuyIt.com?

Site goes for a low 3.5 euro public offer price
Written by Matthew Broersma, Contributor

The third time may end up being the charm for LetsBuyIt.com, which Thursday set a price for its third attempt at a public offering, but the company will raise far less cash than it had originally hoped.

LetsBuyIt has twice delayed its IPO amid rising scepticism over high-tech offerings, calling off a May date that would have priced at about 15 euros a share and a date early this month that dropped the range to between 6 and 7 euros a share.

The final offer price will be 3.5 euros per share, which will raise 62.3m euros and give the company a market capitalisation of 320m euros.

LetsBuyIt said a total of 17.8 million new shares have been issued in a public offering in Germany and a private placement in Europe, with institutions accounting for 90 percent of investors. Trading will begin 21 July on Frankfurt's Neuer Markt.

The low initial pricing is a move to ensure the stock price rises substantially on the first day, though the state of the market makes even this difficult to predict. Analysts said LetsBuyIt's willingness to float under such conditions emphasises its need for capital to continue financing its operations.

Chief executive Martin Coles acknowledged the difficult market conditions, saying he finds the institutional interest heartening. "This has not been an easy time to conduct a public offering for any Internet company, and we are delighted at the conviction that these blue chip investors have shown in LetsBuyIt.com," Coles said in a statement.

LetsBuyIt, which sells consumer products whose prices drop depending on the number of buyers, will use the flotation funds to consolidate and further expand in Europe.

Letsbuyit denies it is running low on funds, claiming it can cover normal spending levels for another two or three months. Letsbuyit has more than 735,000 registered users Europe-wide, around 20 percent of which are active buyers. It has sold more than 27,000 products so far, according to Peter Jaco, Letsbuyit's managing director for the UK and Ireland.

The company's low IPO valuation signals a continued soft market for tech stocks: it is generally considered one of the better e-commerce offerings. Most recently it was ranked tenth in The Bathwick Group's list of top European pre-flotation Internet companies published in last week's Sunday Times.

See techTrader for more technology investment news, plus quotes and research.

What do you think? Tell the Mailroom. And read what others have said.

Editorial standards