May 13, 2009

DigitalGlobe IPO exceeds expectations

Estimated Article Reading Time: 2 min.

Shares of satellite imagery company DigitalGlobe Inc. ended their first day trading 13 percent higher than they started, raising millions for the company an its investors and providing more evidence of an IPO market thaw.

The Longmont company’s shares rose as much as 31 percent above its initial offer price in its first hour before settling into a more steady price to close the day at $21.50 per share on the New York Stock Exchange. Some trading continued in the stock after hours.

DigitalGlobe’s 14.7 million-share offering generated $279.3 million for the company and its investors at its offering price of $19 a share.

The $19 offer price for DigitalGlobe stock was higher than the $16 to $18 per share price that the company forecast as recently as Wednesday. Shares rose quickly Thursday morning, reaching as high as $25 each.

DigitalGlobe sells satellite and other earth observation imagery. Its shares trade on the New York Stock Exchange under the symbol DGI.

The IPO generated $25.9 million for DigitalGlobe to use on operations. The rest of the money raised went to DigitalGlobe investors, the largest of which is investment bank Morgan Stanley.

The pricing and volume of trading on the first day reflected solid demand for the stock, said Doug Wright, a Denver-based partner in securities and corporate finance at law firm Faegre & Benson.

“It’s not a remarkable day, per se, but it’s certainly a good one,” he said, comparing DigitalGlobe’s results to what one might expect in normal times. Wright helped guide local companies Frontier Airlines and United Agri Products through IPOs and had some involvement the IPO of Crocs.

But these haven’t been normal times. There’ been little IPO activity — and none among comparable technology companies — on which to gauge the market’s response to DigitalGlobe.

Only four other companies have gone public on U.S. exchanges this year, all but one of which trade above their debut price. As a result, DigitalGlobe’s public offering has been watched nationally as an indicator of whether the IPO market is thawing.

“That fact that they’ve been to even complete an offering is a fantastic sign for Colorado companies,” Wright said. “I’m hoping this means the lid’s beginning to lift … that money’s going to start flowing again.”

DigitalGlobe is the first Denver-area company to go public since fertilizer-maker Intrepid Potash (NYSE: IPI) had its IPO in April 2008. Ironically, Intrepid Potash would have been Colorado’s leading high volume share-price gainer Thursday, but DigitalGlobe surpassed it.

DigitalGlobe has 460 employees and two orbiting satellites taking pictures.

Its largest customers by far is the U.S. government, which uses the images for non-classified intelligence purposes. The company’s images also become content for popular online mapping companies and for media companies.

Some of the money DigitalGlobe raises will be used to complete its WorldView-2 orbiting imager and to launch it in September.

The advanced orbiter may allow DigitalGlobe to regain its technological edge over its main competitor, Dulles, Va.-based GeoEye Inc. (NYSE: GEOY), which employs about 130 people at a site in Thornton.

Boulder-based Ball Aerospace & Technologies Corp. is building DigitalGlobe’s WorldView2 satellite. It is contracted to be launched aboard a rocket built and operated by Centennial-based United Launch Alliance.

gavery@bizjournals.com | 303-803-9222

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