Smart Technologies Raises $660 Million in U.S. IPO

By Kristen Scholer and Lee Spears
(c) 2010 Bloomberg News
Thursday, July 15, 2010; 12:00 AM

July 15 (Bloomberg) -- Smart Technologies Inc., which has produced interactive whiteboards used in classrooms for almost two decades, raised $660 million in the second-biggest initial public offering in the U.S. this year.

The Calgary-based company priced 38.8 million Class A shares at $17 each yesterday after offering 35.3 million for $16 to $18, according to a statement and a Securities and Exchange Commission filing. Smart Technologies will receive 23 percent of proceeds. Selling shareholders including Intel Corp. and Apax Partners will get the rest, reaping a more than sixfold gain on average, the statement and filing show.

Smart Technologies' initial sale, the biggest by a Canadian technology company in at least a decade, comes as companies from 3-D film projector maker RealD Inc. to Qlik Technologies Inc. seek to raise more than $1 billion combined this week. U.S. IPO filings climbed to the highest since 2007 last quarter even as deals worldwide were canceled at the fastest rate since the collapse of New York-based Lehman Brothers Holdings Inc., while the Standard & Poor's 500 Index rose 5.7 percent this month.

"You've seen the risk appetite of the market increasing and that's certainly good for the IPO marketplace," said Joseph Garner, who helps oversee $2 billion as director of research at Lancaster, Pennsylvania-based Emerald Asset Management Inc. "The tech sector has been one of the stronger areas of the market. It should be a favorable backdrop for IPOs."

Smart Technologies advanced 1.7 percent to $17.29 in Nasdaq Stock Market trading as of 1:54 p.m. in New York. The stock was also listed on the Toronto Stock Exchange. The company will use proceeds to pay debt and for acquisitions, the filing showed.

Morgan Stanley of New York, Frankfurt-based Deutsche Bank AG, and Royal Bank of Canada in Toronto led the offering.

At the midpoint price of $17, Smart's enterprise value, or the sum of its stock and debt minus cash, was about 18.4 times earnings before interest, taxes, depreciation and amortization, compared with about 16.2 times for Blackburn, England-based Promethean World Plc, according to London-based researcher Independent International Investment Research Plc.

Promethean, the U.K. maker of electronic whiteboards chaired by Orange co-founder Graham Howe, has retreated 16 percent since raising 185.75 million pounds ($284 million) in a March IPO.

Smart Technologies reported net income of $142 million in the fiscal year ended in March after sales increased 38 percent, its filing showed. The company had posted losses in the previous two years.

"Nothing has been easy in business, and we don't expect much of an easy ride, but we have gotten larger," Nancy Knowlton, president and chief executive officer of Smart Technologies, said in an interview at the Nasdaq. "We've added to the growth prospects of the business."

Smart Technologies' IPO increased in size as Santa Clara, California-based Intel, the world's largest semiconductor maker, and leveraged buyout firm Apax sold 3.53 million more shares than they had originally intended. Existing owners in the $17- per-share offering bought shares at an average price of $2.69 each, according to the company's filing.

The initial sale was the biggest in the U.S. since Oasis Petroleum Inc. of Houston raised $676 million in June. Smart Technologies, RealD and 88 other companies filed with the SEC last quarter to sell about $23 billion of shares, data compiled by Bloomberg show.

RealD, the Beverly Hills, California-based company whose 3- D film projectors and glasses were used to show James Cameron's "Avatar," plans to sell 10.75 million shares for $13 to $15 today, according to SEC filings and Bloomberg data.

KKR & Co., the New York-based leveraged buyout firm founded by Henry Kravis and George Roberts, started trading on the New York Stock Exchange today, falling 2.7 percent to $10.22 from the last closing price of $10.50 for its shares traded in Amsterdam, which were delisted.

The private equity firm said on July 6 that it may sell additional shares following the New York listing "subject to market conditions."

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