Czech Republic-based security software maker AVG Technologies has shelved plans for its flotation in favour of raising $235m in a loan partly in order to pay its shareholders, which include Intel Capital, a dividend.
Investment banks JP Morgan and Morgan Stanley led the syndicate providing the secured, five-year term loan to AVG in its first capital markets transaction.
The use of public debt rather than equity markets to finance growing companies is relatively rare unless they are seen as having stable and growing cashflows to pay the interest. Traditionally, stock markets have been used as a financing source for fast-growing companies as there is no claim on a company’s cashflow.
Intel Capital, the corporate venturing unit of chip maker Intel, took a minority stake of 20% in AVG as part of a recapitalization of the company in 2005.
Founded in 1991, AVG, formerly known as Grisoft, first received private equity backing in 2001 when Prague-based investment bank Benson Oak took a stake before becoming 100% owner in 2004. It then sold 65% to Poland-based private equity firm Enterprise Investors and Intel Capital a year later for $52m.
In October, US-based growth investor TA Associates invested $200m in AVG at a reported $900m company valuation for a minority stake, with Enterprise being cut from 45% to 35%, according to news provider VentureWire.