Metastorm Inc., a privately held Baltimore software provider, said yesterday that it plans to sell public stock.
The 12-year-old company filed a registration statement Tuesday with the Securities and Exchange Commission for an initial public offering. The company said it could raise as much as $86 million through the offering, according to the SEC filing.
Metastorm, which provides software and other products that help businesses improve human and back-end processes and efficiency, has applied to list its common stock on the Nasdaq stock market under the ticker symbol MSTM.
Laura Mooney, Metastorm's senior director of corporate communications, said yesterday that the IPO filing is a natural progression in the company's evolution. Since 2005, Metastorm has acquired four companies that have helped expand its software offerings, increase distribution capabilities and increase its revenue.
The acquisitions "put us in a position to be a decent-size company, large enough to consider filing for an IPO and also gave us an extensive product footprint so that we had more than one market to go after," Mooney said. The company declined to talk about specifics of its IPO.
Metastorm's public offering proposal comes amid a slowdown in the IPO market. So far, 30 IPOs have been priced as of May 14, compared with 89 in the corresponding period last year, according to Greenwich, Conn.-based research firm Renaissance Capital's IPOhome.com. But the IPO market is improving, said Kathleen Smith, a principal at Renaissance Capital.
Returns among IPOs completed since March have been positive, compared with mostly negative returns earlier in the year, Smith said. Visa Inc., for instance, in March raised nearly $18 billion to complete the largest U.S. initial public offering in history.
Visa's stock, which was priced at $44 for the IPO, is now trading around $83.
"Market has been slowed because we had such a poor beginning of the year. But since March, the market has picked up," Smith said.
Metastorm faces a "better environment," she added.
Metastorm's prospectus did not indicate how many shares the company planned to sell in its IPO or a price range. The company also did not indicate when it plans to go public.
In its filing this week, Metastorm indicated it plans to use the IPO proceeds to expand its sales and marketing as well as research and development capabilities. It also may use the money for capital expenditures and possible acquisitions or technology and product investments.
Last year's report
Last year, the company reported $59.7 million in sales, compared with $42.1 million in 2006. It had a profit of $586,000 last year, compared with a loss of $660,000 in 2006, according to the SEC filing.
The company, founded by entrepreneur Avi Hoffer, began as an electronic forms provider for the federal government in Severna Park. Realizing the Internet could wipe out his business, Hoffer orchestrated an acquisition in 1998 of U.K.-based Sysgenics, whose work-flow application technology helped form the foundation for the company's first business process management product.
Robert Farrell joined the company in 2002 as its second chief executive officer, replacing Hoffer. The company relocated to Columbia before moving to its current headquarters building on Pratt Street two years ago.
Metastorm now has 1,150 clients in 37 countries across industries such as business services, financial services, government, healthcare, manufacturing and retail.
It has 315 employees worldwide, including 66 in Baltimore. It has offices in San Francisco, Southfield, Mich., Tampa, Fla., and Wimbledon, London.
Metastorm's investors include private equity firms and company executives.
ICG Holdings, part of publicly traded Internet Capital Group, which invests in online software and services companies, currently owns 32.2 percent of the company, according to SEC documents. The filings also show that Baltimore's ABS Capital Partners owns 16.8 percent, London-based private equity firm 3i Group owns 12.8 percent and New York-based venture capital group Wall Street Technology Partners owns 9.1 percent.
Of the executives, Farrell owns 2.1 percent, according to the filing.
Underwriters for the IPO include Jefferies & Co, Oppenheimer & Co, Needham & Co., JMP Securities and Craig-Hallum Capital.