CHICAGO (BRAIN)—SRAM’s pending IPO could benefit from the current positive state of the capital markets, according to financial analysts.
“Timing is everything in the M & A business and the financial business,” said Laurence Levi, president of VO2 Partners, an investment firm focused on the specialty sports equipment sector. “A year ago, the market for IPOs was pretty anemic; today it’s pretty hot. A bunch of IPOs becoming active, specifically in the lifestyle market.”
Added Claude Proulx, an analyst with BMO Capital Markets: “The stock market has done quite well in the last 12 months and the S&P 500 is not far from its all time high.”
SRAM announced plans to go public on Thursday, filing a preliminary prospectus with the Securities and Exchange Commission.
In the form S-1, the company said that prior to the IPO it would enter into a new credit facility to repay the $234.8 million invested by Trilantic Partners, formerly Lehman Brothers Merchant Bank, on Sept. 30, 2008 plus a 10 percent annual preferred return. The proceeds from the IPO would be used to repay the new credit facilities, and to acquire all the equity interests in SRAM held by Trilantic.
A new company, SRAM International Corporation, was formed on April 29 to be issuer for the offering. The number of shares to be offered and the price range for the common stock had not been determined as of press time, but the prospectus indicated the IPO would raise up to $300 million.
The company has yet to decide if it will list under the Nasdaq or the New York Stock Exchange, but it will use the ticker symbol “SRAM.”
SRAM reported net sales of $524.1 million in 2010, an increase from $283.8 million four years ago, representing a compound annual growth rate of about 16 percent. In 2010, the road, mountain and pavement product lines represented 26 percent, 62 percent and 12 percent of net sales, respectively.
About two-thirds of company sales originate from the OEM segment with the remainder in the aftermarket. SRAM, owner of Sachs, RockShox, Avid, Truvativ, Zipp, and Quarq power meters. The company estimates it holds about 15 percent market share in the $3.5 billion bicycle component market.