Magazine article American Banker

Record-Setting IPO for Software Firm's Web Spinoff

Magazine article American Banker

Record-Setting IPO for Software Firm's Web Spinoff

Article excerpt

A spinoff by the community bank software provider Intercept Group Inc. raised a record amount of capital in its debut last week as a publicly traded Internet stock.

Netzee Inc. raised $63 million Nov. 9, selling 4.5 million shares at $14 each. The deal netted more than any other Internet banking software developer has realized in going to market this year.

Digital Insight, a Calabasas, Calif., company, raised $52.5 million in its October initial public offering. In June, Online Resources and Communications Corp. of McLean, Va., raised $43 million, and nFront Inc. of Atlanta $39 million.

When private placement deals are included -- notably the $27 million recently raised by Corillian Corp. and $15 million by Q-Up Systems Inc. -- corporate finance activity in the Internet banking software market in 1999 amounts to about $240 million, according to Charles Wittmann, an analyst at First Union Capital Markets.

He said he expects a shakeout within six months. "There is a lot of public money in the sector, so there will be some winners and losers," he said. "You have a lot of people out there that have to get some return on those investments."

Netzee's stock rose 6% the day of its debut, to $14.8125. It traded midday Friday at $14.6875. The company sold 23% of its 19.4 million shares outstanding, giving it a market capitalization of $285 million. Through the first six months of 1999, Netzee had revenues of $2.1 million and a net loss of $22 million.

Intercept, which provides core data processing and electronic funds transfer services to 1,300 community banks, retained 39% of Netzee. …

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