Issuer: eBay
Date: September 1998
Amount: $63 million
Bookrunner: Goldman Sachs,
The issue ended a 25-day IPO drought in the US. In a market where 75% of the deals postponed or withdrawn since July were IPOs, the institutional book alone on eBay’s offering was 20 times oversubscribed. It was the only IPO to be executed in September.
The success of this IPO can be attributed to the fact that it is an easy concept to understand: a profitable internet business with a good brand name. To build a book for privatizing an internet stock might seem challenging. In fact, demand was immense and the shares went to a broad investor base. The initial price was set at between $14 and $16, but just ahead of pricing this was raised to between $16 and $18. “We really did not have much trouble,” says Lawton Fitt, managing director in equity capital markets at Goldman Sachs. “It was a little slow at the outset but it priced above the range and traded well in the aftermarket.”
eBay is effectively a clearing house for the internet; a site which acts as a forum for swaps, sales and auctions of all sorts of things, from teddy-bears to tiaras.