WALL Street analysts have welcomed the decision of Iona Technologies management to sell no more than 10 per cent of their personal shareholdings in the software company when it is floated on the NASDAQ market later this month.
Analysts said it is unusual for the management of a technology company trying to raise capital to hold on to 90 per cent of the shares and sends a positive signal that the management expects the company to do better in the future. The initial public offering of Iona shares is expected to take place on Thursday, February 27th.
Iona's directors are currently on an international roadshow promoting the IPO, promoted by Lehman Brothers.
The roadshow is currently in Europe before returning to the US later this week to promote the Iona flotation to American investors.
Even though the Iona directors are only selling 10 per cent of their shares, they will all become extremely wealthy as a result of the IPO. The chief executive Dr Chris Horn's stake in Iona will be worth $45 million (£28 million) if the shares are floated at $15.50 - the midpoint of the suggested price range.
Mr Annrai O'Toole's stake in the company will be worth $32.6 million (£20 million), Dr Sean Baker's stake will be worth $28 million (£17.5 million), while Mr Colin Newland's stake will be worth $10.4 million (£6.5 million).
The shares that Dr Horn will sell into the IPO will net him $5 million (£3 million), Mr O'Toole will net $3.6 million (£2.3 million) and Dr Baker will net $3.1 million (£1.9 million) if the shares are floated at the $15.50 mid-price.
Iona's IPO may begin a trend for other Irish high-tech companies to float on NASDAQ, and others who may move to NASDAQ include high-tech companies such as Raidtech and Trintech. CBT successfully floated on NASDAQ in April 1995 and since then its shares have risen by 800 per cent.
According to an analyst at the Bank of New York: "Technology companies in Ireland and the UK sometimes bypass their own market to list on NASDAQ due to the fact that there are more potential investors in the US. Americans. understand the technology business better and it's easy to fund small high-tech compare them with.
As a result of the inward investment in Ireland by American companies, this analyst considers that people have gained enough ideas and experience to branch out on their own.
