Ravenswood, a midsized Sonoma winery best known for its red wines, especially Zinfandel, plans to offer 1 million shares of stock on the NASDAQ market. In doing so, it will be the first company to hold its initial public offering exclusively through an online auction.
A new Internet-based system for IPOs has been developed by venture capitalist and vintner William Hambrecht, who runs San Francisco-based W.R. Hambrecht & Co., a boutique investment banking firm. Hambrecht also owns Sonoma's Belvedere and Grove Street wineries and is a partner in Napa's Carneros Creek Winery. His previous firm, Hambrecht & Quist, which he co-founded in 1968, handled the initial public offerings for the Robert Mondavi and Beringer wineries.
In papers filed with the Securities and Exchange Commission, Ravenswood owners estimated that the per-share price of the initial public offering would be between $10.50 and $13.50. But through Hambrecht's OpenIPO system, the price and allocation of shares will be determined through the online auction.
The system is intended to give the same access to individuals as it does to institutional investors. Shares go to the highest bidder instead of to preferred investors. Investors log into Hambrecht's Web site (www.wrhambrecht.com), or the sites of other brokerages participating in OpenIPO, and make secret bids, indicating how many shares they want and the highest price they are willing to pay. The offering is then set at the highest price at which there is customer demand for all of the shares. All the winning bidders pay the same offering price. Anyone who bid higher than that price gets all the shares they requested; those who bid exactly that price get a fixed percentage of the remaining shares; those bidding less don't get any shares.
In theory, a company could raise more money this way if it ends up selling its shares closer to the price at which they begin trading on the market.
Ravenswood has been growing rapidly in recent years, and the public offering will be used to expand production and pay off some debts. In 1994, according to the SEC filing, the winery sold $6.3 million worth of wine; for the fiscal year ending June 30, 1998, it had $17 million in wine sales. Production jumped 31 percent from 1997 to 1998, to 191,000 cases of wine.
The stock will be traded under the symbol RVWD, and the public offering will represent 22 percent of the ownership of the winery.
Ravenswood was founded in 1976 by Joel Peterson, who remains the winemaker. In 1981, he was joined by CEO Reed Foster, who provided financial backing to expand operations.
Most of Ravenswood's grapes are purchased. One of its best wines is the Dickerson Vineyard Napa Valley Zinfandel; it also makes a value-priced Vintner's Blend Zinfandel. Last year, that red varietal accounted for 63 percent of the winery's sales. Ravenswood also makes Merlot, Cabernet Sauvignon and Chardonnay.
To read about other wineries that have gone public:
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