Blue Chip likely to clean up as investee company completes IPO

Business Courier of Cincinnati - September 14, 2007
by Steve Watkins, Staff Reporter

Blue Chip Venture Co. expects to achieve a healthy return on its investment when one of its investee companies goes public later this year.

Aprimo Inc., an Indianapolis-based maker of software used by marketing companies, plans to raise up to $50 million in an initial public stock offering, according to a Sept. 10 Securities & Exchange Commission filing.

Blue Chip invested $3 million in Aprimo two to three years ago, said Jack Wyant, a Blue Chip managing director.

Blue Chip has 2.9 million shares of preferred stock in Aprimo that will convert to common stock when the IPO is completed. The 11 software IPOs done in the past year ranged from an offering share price of $10 to $17, according to Francis Gaskins, president of Los Angeles-based IPO analysis firm IPOdesktop.com. So Blue Chip's stake stands to be worth $29 million to $49 million. Not bad: a return of 10 to 15 times its investment.

Wyant wouldn't comment on the specifics.

"The return will be a meaningful multiple of our investment," Wyant said.

Blue Chip, like the other existing shareholders, can't sell its Aprimo stock for six months after the offering, so it'll have to hope the stock holds up post-IPO.

But Aprimo is off to a good start.

"This has the earmarks of a successful IPO," Gaskins said.

Gaskins was impressed by its revenue growth. Its software, maintenance and hosting sales shot up 41 percent in the first half of the year and generated gross margins of around 90 percent.

"The market really likes top-line sales growth, and they have a blue-chip client list," Gaskins said.

Aprimo's sales rose 69 percent to $52 million last year and are up another 31 percent in this year's first half. It lost money for at least four straight years before turning a $2.1 million profit last year. But it lost $1.9 million in the first six months of this year.