Below is an article from The Standard about Idealab's IPO. Thought the part about Investment Company issues would be of interest to us all
April 20, 2000, 05:32 PM PST
Idealab Files for IPO, With Jack Welch on Board
The VC firm says GE's chairman and CEO has served as a company director since March.
By Kevin Kelleher and Jim Evans
Net Finance, Hollywood-Style
Jurassic Business Park
SoCal: Hatchery on the Rise?
Venture Capital Firms Go National
Tumult in the Options Pits
(April 24, 2000)
Market Download
(April 24, 2000)
Short Season
(April 24, 2000)
Deal Watch
(April 24, 2000)
Email to a Friend
Print Article
Write the Editor
UPDATE Idealab, the Pasadena, Calif.-based venture capital firm founded by Bill Gross, filed for its initial public offering Thursday afternoon. Many expected the move ? but there was a surprise on the board of directors: General Electric (GE) Chairman and CEO Jack Welch.
Idealab plans to raise $300 million in the initial public offering and it would use the proceeds to finance and operate more businesses and for general corporate purposes, according to a filing with the Securities and Exchange Commission. The company will use the ticker ILAB. Goldman Sachs, Donaldson (DLJ) Lufkin & Jenrette, Merrill Lynch (MER) , Robertson Stephens and Thomas Weisel Partners will be the underwriters of the deal.
The prospectus says Welch has served as a director of Idealab since March 2000. Since 1981, he has held the role of chairman and chief executive officer of GE, becoming one of the most respected chief executives in the world.
According to the filing, CEO Bill Gross' stake in Idealab before an IPO is 41.58 percent, or 390,140,900 shares, which seemingly assures him instant billionaire status the day Idealab hits the market. The cash will come in handy because Gross has taken out about $30 million in loans from the company in the past year, according to the filing.
Also, Idealab revealed that it is taking steps to avoid scrutiny under the Investment Act of 1940, which "requires registration for companies that are engaged primarily in the business of investing, reinvesting, owning, holding or trading in securities." Usually, mutual funds are classified in this category, but the jump in Net valuations and the fact that businesses that invest in Net companies are now going public has made this a problem for a few firms. Both Internet Capital Group and CMGI have had to wrestle with the SEC over this issue, as well.
In the SEC's eyes, a company is an investment company if it owns securities with a value exceeding 40 percent of the value of its total assets. A company like Idealab is safe from the Investment Act if it owns more than 50 percent of the company in question. Technically, it is then the controlling shareholder.
In its S-1, Idealab states that as of Jan. 28, 2000, more than 40 percent of the value of its assets were securities issued by companies that are not majority-owned subsidiaries. The firm filed an application with SEC requesting a permanent order declaring that it is in a business other than that of investing, reinvesting, owning, holding or trading in securities. On March 28, the SEC granted a temporary order that exempts Idealab from all provisions of the Investment Act for a 120-day period ending on July 26 while it considers the request for a permanent order.
Idealab's Stake in Startups
Company Percentage Stake
CarsDirect.com
44
Cooking.com 6
EToys 12
Eve.com 17
FirstLook.com 44
FreeMusic.com 88
iExchange.com 44
Jackpot.com 81
jobs.com 2
MyHome.com 70
PETsMART.com 21
Swap.com 44
Ticketmaster Online-CitySearch 1
Tickets.com 5
Utility.com 34
WeddingChannel.com 7
z.com 51
Centra Software less than 1
dotTV 50
eMachines 10
EntryPoint 55
eVoice 31
GoTo.com 27
HomePage.com 56
Intranets.com 33
NetZero 5
OpenSales 46
PayMyBills.com 50
PeopleLink 11
Sameday.com 46
Source: SEC filing
|
