Square 1 Bank plans bigger IPO

03/17/2014 11:18 AM

02/15/2015 10:42 AM

Square 1 Bank has significantly upped the ante for its initial public offering of stock.

The Durham-based bank disclosed in a Securities and Exchange Commission filing on Friday that it anticipates selling up to $119 million in stock – more than double the $57.5 million it had targeted in earlier filings.

Square 1 is now anticipating selling 3.1 million shares at between $15 and $17 per share. In addition, a group of major shareholders plans to sell 2.8 million shares.

If the company succeeds in going public at $16 per share, Square 1 would reap net proceeds of $45.5 million after paying fees and expenses stemming from the IPO. It won’t receive any of the proceeds from the stock sold by its shareholders.

The underwriters also have the option to purchase an additional 469,000 shares from Square 1 and its shareholders at the IPO price.

The shares being sold in the IPO represent about a 22 percent stake in the company. With 27.2 million shares outstanding after an IPO, the company’s market capitalization would be about $435 million if it goes public at $16 per share.

Founded in 2005, Square 1 has a dozen offices nationwide that provide a wide range of banking services to venture capital and private equity firms and the businesses they invest in. Its local footprint is confined to its headquarters office in downtown Durham’s American Tobacco campus.

The 230-employee bank posted $22.1 million in net income in 2013, up from $14.1 million in 2012.

A new filing that the company made Monday provides some insight into the company’s sales pitch to potential investors. The filing includes slides from its IPO “road show” – closed-door meetings in various cities with institutional investors, such as mutual funds, pension funds and other large money managers.

The filing touts that the bank’s loans have been expanding at a compound annual growth rate of 22 percent, while deposits have been rising at a 15 percent annual clip since 2009. Net operating income has climbed from $10.8 million in 2009 to $36.1 million last year.

An unprecedented seven Triangle-based companies went public in 2013, raising anywhere from tens of millions to hundreds of millions of dollars. So far this year two local companies – Argos Therapeutics and NephroGenex – have successfully launched IPOs.

In addition to Square 1’s pending IPO, last month Durham drug-development company Scynexis also filed plans to go public.

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