If you look at the original announcement by Francisco Partners you see:
Francisco Partners L.P., a Menlo Park, Calif.-based private equity firm, will invest $150 million in cash for convertible preferred stock representing a 6.3 percent ownership interest, subject to adjustment in certain circumstances.
So two points here:
First, they are getting convertible preferred, not common. Convertible preferred is more valuable than common, so you can't just multiply the ownership interest by the value to get the total market cap of the firm. This is particularly true where the firm actually has some liquidation value because it has hard assets. So think of this more like a bond plus a call option - if the company tanks they get a chunk of their investment back, whereas if it does well they get equity.
Second, there is that "subject to adjustment" clause. This might mean some sort of standard anti-dilution provision if they have to sell more equity at a lower price, or it could be something much more dramatic.
Bottom line is that we don't know all the details here, but we do know their Preferred stake is likely worth much more than 6.5% of the company.
Peter |
