A Columbia software company became at least the 18th Maryland firm to go public since the beginning of last year, as Credit Management Solutions Inc. and its founders sold 2.6 million shares for $11.50 each.
The offering left executives of the company owning more than 60 percent of the shares, and valued the firm overall at $82.9 million. The shares rose after Thursday's offering to close yesterday at $13.50.
Credit Management sells software that lets consumer lenders automatically check the credit history of prospective borrowers and applies the lender's standard criteria for approving or rejecting loan applications. In most cases, it can entirely automate the loan-approval process.
The company launched the offering because it needed money to fund development of a new service it is marketing to car dealerships, which will let them instantaneously shop customer financing applications to multiple lenders in search of the best deal. The new service also allows banks instantly to transmit funds from approved loans to the dealers, eliminating a "float" of up to several days before the dealers are paid.
"It's an interesting company. It's a play on the growth of the consumer and small-business credit markets," said William K. Smith, an analyst at Renaissance Capital Corp., a Greenwich, Conn., firm that follows the initial public offering market. "I believe they are heading into an attractive industry, but the fundamentals now are low."
Those relatively shaky fundamentals -- especially company's weak working capital position and negative book value -- probably contributed to the timing of the IPO, Smith said. It also may have produced the $11.50 offering price, which was near the low end of the $11 to $13 range the company had forecast in its filings with the U.S. Securities and Exchange Commission.
Pub Date: 12/21/96