Israel Economics

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Saifun, Predix and Passave heading for Nasdaq
23.10.2005 | 09:21
Omri Cohen

Ituran Location and Control (Nasdaq, TASE: ITRN), a long-listed Israeli stock, hit Nasdaq with a splash in September 2005. Now three other major Israeli companies are eyeing the New York tech exchange and hope to float by year-end.

Predix Pharmaceuticals, a biotechnology company, had been supposed to carry out its pricing for Nasdaq last week, but will evidently only forge ahead this week. The company's most advanced drug candidates target Alzheimer's Disease, cardiovascular disease, obesity, and anxiety and depression.

On Friday Passave Technologies, a fabless system-on-chip designer, and chipmaker Saifun Technologies took giant steps ahead of their initial public offerings on Nasdaq, both filing prospectuses with the U.S. Securities and Exchange Commission. The next stage will be the traditional road show, at which the companies flaunt their stuff before institutional investors ahead of holding the pricing stage.

Sobering up at Saifun

Market players have been expecting Saifun to go public for some five years now. One reason it delayed was the tech crash and another was low pricing on the Nasdaq. Even now, Saifun's shareholders are not realizing their fondest dream, of floating the company at a billion-dollar valuation. It's getting around half that.

It had been thought that Saifun's alliance with the German company Infineon might expedite the offering, but it probably didn't. Since its inception, the joint venture has accrued losses of about $50 million from 2001 to 2004. Saifun sold Infineon its part in December 2004 and posted a capital loss if $17.3 million.

Saifun invented and patented a technology it calls nitride-read-only memory, or NROM, which it believes is a step forward in the nonvolatile semiconductor memory market. Nonvolatile semiconductor memory devices retain stored information even without a power source.

The company's two revenue streams are licensing its intellectual property, and design and product development services that it provides to its licensees.

This year the company has been doing much better. For the six months ended June 26, 2005, Saifun earned $25.1 million on $44.9 million total revenues. During the year-earlier period, the company lost a net $9.1 million on $12.7 million revenues.

According to its prospectus, Saifun wants to sell 5 million shares at an estimated price of $20.50 to $22.50 each, raising around $102.5 to $112.5 million at a company value of $588 million to $645 million.

Actually, the figures mean that Saifun has sobered up. Its management had initially thought to hit the market at a billion-dollar valuation, if not more.

Saifun has granted its underwriters the option to buy an additional 750,000 shares to cover over-allotments. Lehman Brothers, Deutsche Bank Securities, CIBC World Markets, William Blair & Co. and Raymond James are underwriting the offering.

Its shareholders however decided not to sell any of their personal holdings, leaving them millionaires on paper alone.

The paper reads well, though. The company's founder and controlling shareholder Dr, Boaz Eitan, will own shares worth a quarter-billion dollars after the IPO.

Passave

Passave develops and supplies system-on-a-chip solutions for networking equipment that enables service providers to offer voice, video and high-speed Internet access. It also filed its paperwork with the SEC, on Saturday night.

The company estimates that it will receive $68.2 million in net proceeds from the IPO, which it will use for working capital and general corporate purposes, including research and development, and acquisitions of products, technologies or companies.

Assuming an offering price of $16 per share, the midpoint of the range, Passave will have an initial market capitalization of $197 million.

Passave said its stock has been approved for listing on the Nasdaq under the symbol PSVE.

Unlike in the case of Saifun, here the founders and shareholders will be handling any over-allotment to underwriters. They agreed to sell 750,000 shares, if needed.

Predix postpones

Predix had been supposed to float already. It wants to raise between $50 million and $60 million in proceeds from the IPO by selling million common shares for between $10 and $12 each. The company value will be in the range of $211 million to $253 million, assuming all goes well.

Under the proposed terms, Predix could raise between $50 million and $60 million in proceeds from the IPO.

The underwriters, led by UBS Investment Bank and Deutsche Bank Securities, will have the option to buy 750,000 more shares in the event of heavy demand by investors, Predix said in an amended offering document filed with the U.S. Securities and Exchange Commission.

CIBC World Markets and ThinkEquity Partners will assist.

Predix said its most advanced drug candidates treat Alzheimer's disease, cardiovascular disease, obesity, and anxiety and depression. The company said it has applied for a listing on the Nasdaq National market under the symbol "PRDX".

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