Why divine selected Robertson for its IPO

May 31, 2000

BY HOWARD WOLINSKY AND JESSICA MADORE FITCH BUSINESS REPORTERS

Why did Flip flip investment bankers?

Divine interVentures' founder Andrew J. "Flip" Filipowski is switching horses on what he hopes is the eve of a initial public offering because lead underwriter Credit Suisse First Boston had IPO market jitters. Filipowski wants to go full speed ahead, believing that divine is strong enough to stand alone, even in a bad market.

Divine, the Lisle-based Internet holding company, named Robertson Stephens as the lead underwriter on an IPO targeted for sometime between June 22 and 29. The IPO originally was expected in late March, but moved to the back burner as investors soured on technology stocks in general.

Filipowski told the Chicago Sun-Times that Credit Suisse was tarnished along with other underwriters that were highly visible in a hostile IPO market, and was not taking start-ups public until fall, when market conditions might improve. "They are in a bit of a penalty box," he said.

Credit Suisse had been more visible as an IPO underwiter during the market's decline--which works to the disadvantage of companies now wanting to use them to lead their IPOs, he added.

Also, Filipowski said "nearly the entire staff of [Credit Suisse] assigned to divine has left," including Cameron Lester, the principal contact who was a long-time associate of Filipowski.

However, he said Robertson Stephens, which was a secondary underwriter, remains bullish on divine's chances in the public markets.

Filipowski told his board that Robertson Stephens thinks "divine is one of the few [companies] that has the ability to go public successfully in this market. . . . This may be an opportunity to get total dedicated attention from the investment bankers, their sales forces and from institutions that are still buying quality.

"Robertson may be the ideal," Filipowski told the Chicago Sun-Times. "Their folks are still the ones that we have the best relationship with. Their track record right now looks like the best track record."

Alan Warms, founder of Participate .com, the Chicago manager of online communities for businesses, agreed. Robertson Stephens is the lead underwriter for his company's IPO, which was withdrawn Friday because of the poor market for IPOs.

"Robertson Stephens is a top-tier investment bank," Warms said. "The reason we selected them is they are tech-focused and have a record of identifying the early winners and sticking with them as they grow to be successful companies. Great examples are E-Trade, the online broker, and Critical Path, the outsourced e-mail company."

Robertson Stephens did not return phone calls for this article.

Divine plans to file updated registration papers today with the Securities and Exchange Commission to clear the way for Robertson Stephens to start a "road show" to present divine's offering to influential investors.

The offering is expected to raise $140 million to $180 million. Institutional buyers already have committed $300 million to divine.

In part, divine might be under some pressure to go public to receive some of the private funding from Microsoft and Dell Computers that is based on an IPO.

Filipowski said divine has $100 million in cash on hand.

The IPO for divine, which has invested in 53 Internet companies, received major attention this year because it was one of the largest planned for the year and because of the involvement of software mogul Filipowski.