Maverick lessons from dirty auction

From Ms Lise Buyer.

Sir, I write in response to Lina Saigol’s column “Why it still takes courage to go Dutch” (February 3). While it is true that Google’s stock traded up immediately after the initial public offering, from the $85 where the auction set the price to $100, an underpricing of 17.6 per cent, those of us on the frontline of that transaction hardly consider the result a “flop”. Two of the goals for our IPO were to avoid the all too common first day “pop”, where the new security jumps 50 per cent or more from pricing to close, and to avoid the dreaded day-one stumble, gleefully predicted by many of the pundits at the time. While our transaction price clearly reflected Wall Street’s disapproval with some of the quirkier aspects of our deal, we were generally pleased with the outcome, particularly in terms of share allocations, of our “dirty” Dutch auction (”dirty” in that we exercised our right to price the deal below the actual crossing price).

As we had hoped, many of the investors who understood our auction process and bid successfully used their IPO allocations as a base on which to build larger positions that served them (and Google) well for years. While we did not execute the perfect IPO, we designed and publicised a more efficient, less expensive, non-traditional launch into the public markets. Today, there is a great opportunity for some other maverick to learn from our mis-steps, leverage our efforts and improve the process even further.

Lise Buyer,
Principal,
Class V Group,
Portola Valley, CA, US