Zipcar prices IPO at $18 per share
CAMBRIDGE, Mass. — Zipcar Inc. said its initial public offering is valued at approximately $174.3 million as it priced the deal late Thursday.
The car-sharing company that rents rides for as little as an hour said the IPO of approximately 9.7 million shares is priced at $18 per share. That's above the $14 to $16 price range it had expected to price the shares at.
Zipcar is offering about 6.7 million shares and certain selling stockholders are offering approximately 3 million shares.
Certain selling stockholders have given the underwriters a 30-day option to buy up to an additional 1.4 million shares at the IPO price.
Zipcar plans to use the net proceeds to pay some debt, to expand its business, for working capital and other general corporate purposes. It will not receive any proceeds from shares sold by selling stockholders.
Zipcar has never been profitable since it was founded in 2000. It expects to lose money again in 2011. Cars, its main expense, don't come cheap.
Unlike a car-rental program, Zipcar doesn't require customers to visit a store to pick up keys. Rather, members pay a $60 annual fee and $25 application fee to join and get a keycard. Cars are parked throughout their city.
Members go online to reserve a car nearby, and their keycard unlocks it. Hourly rates vary but are usually less than $10. Customers don't pay for gas.
Although Zipcar says it has identified dozens more cities where it could succeed, there are questions about just how far it can expand. Its model works best in densely populated areas where many residents don't own cars.
Zipcar, based in Cambridge, Massachusetts, is a giant among U.S. car-sharing programs, operating in 14 cities. Most of its competitors serve just one. It bought its major direct competitor, Flexcar, in 2007.
However, rental car companies Enterprise and Hertz have created their own car-sharing programs. Zipcar's smaller rivals also recently formed an alliance called The CarSharing Association.
Zipcar is quickly expanding on college campuses with cars at 230 colleges, up from 150 in June. Last year, it moved overseas by buying U.K. rival Streetcar Ltd.
Zipcar says it has pinpointed more than 100 metro areas worldwide and hundreds more colleges as attractive markets.
The company plans to trade on the Nasdaq Stock Market under the ticker "ZIP". The stock is expected to start trading on Thursday.