BankRate CEO Tom Evans discussing his company’s IPO, why it went private two years ago and how that decision has changed the company.
BankRate Inc. (RATE), the operator of personal finance sites like Bankrate.com and CreditCards.com, today rejoined the public markets with a $300 million IPO. The Florida-based company had been taken private in 2009 by Apax Partners for $571 million, or about one-third of its current market cap. While private, BankRate diversified by acquiring both CreditCards.com and NetQuote.
Shares dropped more than 6% below their $15 per share offer price in early trading, but have since rebounded to just north of even.
So I spent some time on the phone with Tom Evans, who has been CEO of BankRate since 2004. What follows is an edited transcript of our conversation, which took place just before Evans rang the NYSE closing bell:
Fortune: Buyout firms often talk about the advantages of being private. Do they exist?
Evans: There definitely were some advantages to being private. One of the reasons we looked to go private in the first place was that we saw in 2009 that the credit crisis was possibly going to be detrimental to our business and we didn’t know how long it would last. We also saw strategic assets available for sale, and that acquiring them could really change the trajectory and competitive position of our company.
We wouldn’t have been able to make those acquisitions if we’d been a public company, both because the private equity backer provided capital and because one wouldn’t have taken our paper.
There also are just things in terms of investment, innovation, testing and marketing that we weren’t doing as a public company because of the need to continuously growth margins and profitability. We learned through that such processes are good things to do, and will continue to do them.
Even though you’ll now have to deal with earnings call and analysts and hedge fund managers?
I don’t mean do it in a way that lowers earnings. Just in terms of the fact that we’ve seen the benefits we’ve gotten from innovation and tech iteration and always trying to improve. Not investing a ton of money so that we have a dislocated quarter, but also not so maniacle about increasing margins every single quarter…
You originally filed to raise $500 million, but then issued pricing terms that brought you in the $300 million range. What changed?
$500 million was just a very preliminary placeholder. We wanted to gauge what was appropriate for Apax, which is just selling 8% of their equity in the IPO.
This has been a very volatile week in the public markets. Did you consider postponing the IPO?
The question is to get out or not yet out. We’re always trying to create shareholder value, but what the stock does on Day 1 is less relevant than what it does in six months or a year or two years. We felt that we got a pretty good response with a great investor base of people who wanted to be long-term shareholders. We’d been public before, so knew it wouldn’t be a bidding frenzy like Pandora (P) or LinkedIn (LNKD).
The question was if we’d have enough demand to price the stock within the range, which we did. If we’d had to price below the range, it would have been a completely different calculus.
What were the most common roadshow questions you received?
We had great growth trajectory last time we were public, so people wanted to know if we could grow margins like that now that we’re a much larger and more diversified business. Also, a quasi-comp – QuinStreet (QNST) – blew up just as we were beginning, by announcing that they’d miss growth numbers for the year. We have a very different business from them, but it was still of concern to investors. So we’d explain the differences, and also the activity we’re seeing in terms of consumer and advertising demand.
Enjoy ringing the closing bell
Thanks. Looking forward to it.
