The Tel Aviv Stock Exchange's (TASE) efforts to get high-tech companies to list on it are showing the first sign of success. Software monetization company Somoto Inc. has filed a draft prospectus for an IPO. The company will reportedly raise NIS 10-20 million in an offer of 10-15% of its shares, at a company value of NIS 120 million, after money. The company raised $600,000 at a company value of $5 million, before money, in its last financing round, in 2010.
Somoto was founded in 2009 by Eyal Yaakov and CEO Ben Garrun, who is the company's largest shareholder, with a 30.7% stake. Former Clal Finance CEO Shuki Abramovich, who serves as Somoto's chairman is a prominent investor. Other investors include former Psagot Investment House Ltd. chairman Arik Steinberg, former 888 Holding plc (LSE:888) CEO Gigi Levy, former Babylon Ltd. (TASE:BBYL) VP Nadav Goshen, Mobileye Inc. founders and executives, and pharmaceutical importer Neopharm Israel Ltd.
Somoto provides software monetization distribution services. The company says in the prospectus that it has developed a smart installation system which can automatically install many software programs for Internet users. Under its business model, payment for the distribution services is based on the installation of monetization software and/or searches by the user through the software. The company says that its future growth engine is mobile apps distribution.
Somoto is encouraged by yesterday's reports that Perion Networks Inc. (Nasdaq:PERI: TASE:PERI), which is in a similar business, is in talks to be acquired by Conduit Ltd. Somoto hopes to exploit the wave to boost demand for, and the value of, its offering.
Somoto posted $9.6 million revenue in 2012, up 175% over 2011. It swung to an operating profit of $382,000 in 2012 from an operating loss of $72,000 in 2011. It posted an operating profit of $1.1 million on $5.9 million revenue for the first quarter of 2013.
Somoto will use the IPO proceeds to acquire a platform to increase traffic on its products distribution website, hire more employees to develop new products and expand marketing overseas, and to expand to the Brazil, Russia, India, China, and Southeast Asia.
Somoto's customers include Perion, which accounts for 42% of its revenue, and Babylon, which accounts for 24%. The company has 62 employees at its offices in Tel Aviv and Houston.
Published by Globes [online], Israel business news - www.globes-online.com - on July 11, 2013
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