Boston-based private equity firm Summit Partners is set to earn up to $74 million (€57 million) through an IPO of online brokerage portfolio company OptionsXpress, according to regulatory filings with the Securities and Exchange Commission.
In January 2004, Summit led an $88 million recapitalization of the company in exchange for a 32 percent ownership stake and a seat on the board of directors. As part of the IPO, the private equity firm will sell 4.5 million shares, approximately 25 percent of its holdings, at an offering price between $14.50 and $16.50 for total proceeds ranging between $65 million and $74 million.
Founded in 2000, Chicago-based OptionsXpress has quickly grown from revenues of approximately $2 million in 2001 to $68 million in the first nine months of 2004. James Gray, chairman of OptionsXpress and the company’s largest shareholder with 36 percent ownership, will sell approximately 6 percent of his stake in the offering.
Summit has been an active investor in the financial services sector, with four of its 52 existing portfolio companies participating in the space. In October 2004, Summit filed an $86 million IPO for portfolio company Seabright Insurance, a provider of worker compensation insurance. A few months earlier, the firm led a $316 million recapitalization of Las Vegas-based Global Cash Access, an operator of ATMs and credit-card machines in gaming facilities. And in 2003, Summit portfolio company iPayment, a credit card processor, went public in an $80 million IPO.
Summit Partners, with additional offices in Palo Alto and London, was founded in 1984 and has raised more than $5.5 billion in capital. In March 2004, the firm closed its third subordinated debt fund on $465 million. Summit Ventures VI, a $2 billion fund, closed in 2001.