AVG Technologies, a Netherlands-based internet security company formerly known as Grisoft, plans to raise $125m in its New York flotation next month following a dividend recapitalization last year.
Although the price and timing of the initial public offering (IPO) has yet to be decided, AVG in its regulatory filing said it would compensate some shareholders if the "price is below $14.85, assuming that the closing of this offering occurs on or around February 7, 2012". With 48 million shares issued, worth an assumed $14.85 each, the market capitalization of AVG would be $712.8m.
Intel Capital, the corporate venturing unit of US-listed chip company Intel, owns 15%, 7.2 million class E shares of AVG, having sold five percentage points, or 1.8 million class D shares, to private equity firm TA Associates in October 2009.
TA at that time acquired 31.8% of AVG for a reported $200m through buying shares from other owners, including 4.05 million D shares from Polish Enterprise Fund, which is managed by buyout firm Enterprise Investors.
After the share sale, AVG took out a $235m loan arranged by banks JP Morgan and Morgan Stanley to partly pay a dividend to shareholders, although there is understood from insiders to have been disagreement about this strategy with some wanting the debt to be used as capital to buy peers or otherwise grow the company.
AVG has also taken steps to limit potential competition from Intel as a minority shareholder. In its regulatory filing, AVG said: "Intel acquired McAfee, one of our leading competitors, and has indicated its intention to integrate McAfee’s security solutions into its hardware products, which may adversely affect sales of our aftermarket and/or standalone security solutions….
"Intel Capital and AVG agreed on measures to address competitive concerns arising from Intel’s announcement of its intention to acquire McAfee, the subsequent completion of that acquisition and its continued minority ownership of AVG. These include measures designed to prevent Intel Capital from accessing certain commercially sensitive information about AVG and suspending Intel Capital’s right to appoint a member of or have an observer on our supervisory board.
"Upon completion of this offering, Intel will have no ongoing special rights and will therefore only receive information about us at the same time and in the same fashion as our other public shareholders. Accordingly, the measures agreed by Intel Capital and AVG will terminate on completion of this offering."
Investment banks Morgan Stanley, JP Morgan and Goldman Sachs are co-lead underwriters of the IPO.
AVG more than doubled its net income to $99.7m for the first nine months of last year, compared to the same period in 2010, from $198m in revenue.
Founded in 1991, AVG 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.