Babylon filed on Monday night the paperwork necessary to list for trading on Nasdaq.
The stock kicked off trading on Tuesday in Tel Aviv with a 4% jump on the news, but ended the day down 4% on heavy turnover of NIS 35 million.
After a long year of negotiations, the Israeli translation-software and search company filed its preliminary offering prospectus with the U.S. Securities & Exchange Commission, which means it can start its road show - meetings with potential investors - within 21 days. The IPO is expected to take place by the end of the year.
At this stage the prospectus is a rather raw product: The Tel Aviv-listed company wants to raise up to $115 million in its initial public offering in the United States but did not give details of the pricing for shares. That is what most likely spooked investors and sent the share falling. Many investors still think controlling shareholder Noam Lanir will in the end buy out the shares now trading on the Tel Aviv Stock Exchange and delist the company.
The $115 million figure is a "fictitious, preliminary number, said sources close to the company. It consists of $100 million to be raised, the minimum required by Nasdaq for an IPO, and $15 million in fees. The amount to be raised will most likely be higher.
Under the American system of disclosure, at a later stage Babylon will reveal more information on its strategic partnership agreement with search behemoth Google and provide guidance on revenues and profits. It will also unveil the scope of its planned offering.
Babylon "intends to use the net proceeds from this offering for general corporate purposes, including sales and marketing expenditures aimed at growing our business through user acquisition activities with third party software distributors," the company wrote in the prospectus.
The firm may also use a portion of the net proceeds "to make acquisitions or investments in complementary companies or technologies." The company will not receive any of the proceeds from the sale of shares sold by the shareholders. Babylon said it does not plan on distributing dividends in the foreseeable future.
Babylon, based in Or Yehuda, was founded in 1997 and booked $144 million in sales for the 12 months ending in September 2012.
The firm will trade its ordinary shares under the ticker symbol BBYL. Citigroup and Jefferies are handling the book-running and RBC Capital Markets is acting as lead manager.
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