WebVan Looks to Raise Up to $345m in IPO

Computergram International, August 10, 1999

WebVan Group Inc, which sells groceries and personal products on the internet, has filed for an initial public offering worth up to $345m. The Foster City, California-based company is looking to sell as much as $300m worth of common stock, with an option for up to $45m more to be granted to the underwriters for over- allotments. All of the shares will be sold by the company. Goldman, Sachs & Co will act as managing underwriter for the offering, while DLJ, Merrill Lynch, BancBoston Robertson Stephens, Bear Stearns, Deutsche Banc Alex Brown and Thomas Weisel Partners, will co-manage.

WebVan says proceeds from the offering will be used for funding the construction of, and equipment for, distribution centers and for general corporate purposes, including working capital. The company provides it service only in the San Francisco Bay area for now but recently signed a $1bn construction contract to build warehouses in 26 markets across the US. It delivers supermarket items, including perishable goods, in its own fleet of trucks on either the day of purchase or the next day.

WebVan lost $12m on zero revenue in 1998 and in the first half of this year has booked losses totaling $33.5m on revenue of just $395,000. Although the company was founded at the end of 1996, it only began providing its services to the public in May. Earlier this year, WebVan raised about $400m in venture capital from a group of backers including Softbank Corp, Yahoo! Inc and CBS Corp.