The world’s largest VoIP provider has filed an S-1 notice with the US Securities and Exchange Commission outlining its intention to IPO in the US. Contrary to other press reports that claim that Skype is intending to raise US$100m through the process,…
The world’s largest VoIP provider has filed an S-1 notice with the US Securities and Exchange Commission outlining its intention to IPO in the US. Contrary to other press reports that claim that Skype is intending to raise US$100m through the process, the filing does not specify how many shares it is offering and how much it intends to raise. The target placement value will be announced further on in the process, once the Luxembourg-based company consults with its placement advisors. Skype, founded in 2003, was acquired by eBay in 2005 for US$2.6bn and dependent on the amount of equity it is willing to release could raise a significant amount of money. In November last year, eBay sold 70% of Skye to a consortium led by Silver Lake which included Andreessen Horowitz and the Canada Pension Plan Investment Board which bought 56% of the company. Skype’s co-founders Janus Friis and Niklas Zennstrom purchased 14%. The deal put Skype’s value at $2.75bn. Representatives of Skype were unable to comment due to SEC filing rules. However, one person who is familiar with the matter said that despite the malign market conditions, the board of Skype had decided to approach the markets as they though that it was the right time for Skype to move to the next stage of its development.
There has been a great deal of speculation about the motives behind Skype’s move to list the company publically. Some commentators have claimed that this is an exit strategy for one of the investment partners. However, careful reading of the S-1 notice shows that the proposed post-IPO board remains comprised of the main investment partners, and a breakdown of the post-IPO ownership structure still lists the consortium members: Silver Lake, CPP, Andreessen Horowitz, eBay, Joltid, Charleston Investment Holdings and Friis and Zennstrom as the principal private shareholders. The company states that the money raised will be used for “general business purposes”. Skype has increased its subscriber base virally, and at the end of June had a monthly average of 124m free users and 8.1m paying users, up from 91m free users and 6.6m paying users respectively in the 2Q’09. Total registered users grew from 397m in 2Q’09 to 560m in 2Q’10.1H’10 revenue for the company was US$402m net. The company has been aggressively expanding its business lines. It has low capital requirements and low operating costs, so one could surmise that this new injection of capital would fund organic growth in its fee-paying Skype for Business unit and with recent agreements signed with Verzion and collaboration with Android and iPhone may also fund R&D for new applications for smartphones and tablets. Another business area highlighted in the S-1 notice was ‘Skype Kit’ for software and hardware developers allowing application designers to use Skype technology in the development of their own apps, which they would then sell onto mobile broadband users. The money could also be used for strategic bolt-on acquisitions to support the development of Skype’s fee-paying business units.
