SAN JOSE, Calif. – AboveNet Communications Inc., a provider of outsourced Internet hosting and connectivity services to companies that use the Web, went public December 10, offering 5 million shares at $13 apiece. The stock priced at the high end of the company’s $11 to $13 filing range.
Underwritten by CIBC Oppenheimer and Volpe Brown Whelan & Co., the initial public offering left 12.8 million shares of common stock outstanding.
There were no selling shareholders. Venture investors include Kline Hawkins California SBIC, Technology Associates Management Co. Ltd., Primus Technology Fund and its affiliated fund, Primus Holdings (BVI) Inc.
With the growth in e-commerce, Internet-based businesses and other enterprises need non-stop, reliable and non-congested Internet operations to allow them to perform digital communication and electronic commerce transactions. AboveNet Communications’ services reduce the number of network connections, or hops, that data must make as it is transmitted. The company targets businesses seeking to establish these sophisticated Internet operations, but lack the resources and expertise to cost-effectively develop, maintain and enhance the necessary facilities and network systems. AboveNet Communications markets its services through a direct sales force and through partnerships with value-added resellers, system integrators and Web hosting services.
Proceeds from the IPO, estimated to be approximately $54 million, will be used to increase sales and marketing activities, the development of a planned second Northern California facility, potential strategic investments, working capital and general corporate purposes.
AboveNet Communications, incorporated in California in 1996, has not been profitable, losing $1.8 million in the fiscal year ended June 30, 1997, and $5.4 million in the fiscal year ended June 30, 1998. In the three months ended September 30, 1998, the company lost $3.35 million.
Tom Shao, a managing director of Technology Associates Management Co. Ltd., joined AboveNet’s board of directors in January 1998, followed by Frank Kline, a managing partner of Kline Hawkes, in August.
AboveNet Communication – selected Financial
(in thousands, except per share data)
March 8, 1998
(inception) Year Ended June 30,Three Months Ended September 30,
to June 30, 1996 1997 1998 1997 1998
Revenue 79 552 3,436 431 1,793
Net loss -78 -1,803 -5,425 -662 -3,351
Net loss per share
-0.62 -9.17 -20.68 -3.14 -7.35