Kornit's equity value has increased 23-fold since Fortissimo's investment
Fortissimo Sells Kornit Shares for $90 Million in Nasdaq Secondary
Published in Globes on January 26, 2017
Rosh Haayin-based Kornit Digital (Nasdaq: KRNT) yesterday completed a lightening offering of 7.5 shares at $16.50 per share after the close of Nasdaq trading. Kornit, which develops various types of digital printers for textiles, such as clothing, curtains, and bedcovers, issued two million new shares for $33 million. Kornit controlling shareholder Fortissimo Capital sold 5.5 million shares for $90 million.
Managed by founding and managing partner Yuval Cohen, Fortissimo planned to sell five million shares in the offering, but took advantage of demand being triple the number of shares sold to increase its sale of shares. The sale of shares is unusual for Fortissimo, because it acquired its controlling interest in Kornit with a $16 million investment at a company value of only $23 million. The company value has since increased 23-fold. The current offering reduced Fortissimo’s holdings in Kornit to 29%, worth $170 million at the current market price.
Aim of the financing round: Acquisitions
According to prospectus for the offering, Kornit CEO Gabi Seligsohn, who joined the company in 2014, holds a 17% stake in it. Asked how the money from the offering would be used, Seligsohn told “Globes,” “The company is constantly searching for ways to quicken its growth rate. Among other things, it is considering possible acquisitions of other companies. The money will enable us to take advantage of acquisition opportunities when they become available.”
Chief underwriters Barclays Bank and Citigroup received a 30-day green shoe option to buy 1.125 million Kornit shares.
The Kornit share surged 5% to $17.35 at the end of yesterday’s Nasdaq trading, completing a 37% rise this year. The company’s market cap is now $530 million.
Founded in 2002, Kornit held its Nasdaq IPO in April 2015, raising $71 million gross at a $10 a share. Earlier, in 2010, before Fortissimo invested in the company, Kornit, controlled at the time by founder Moshe Nur and Yitzhak Tshuva’s Delek Group Ltd. (TASE: DLEKG), failed in an attempted IPO on the Tel Aviv Stock Exchange (TASE) at a company value of only NIS 70 million, after attracting no demand.
Cooperation with Amazon
Kornit reported two weeks ago that it was stepping up its cooperation with online retail giant Amazon.com. Under the agreement signed by the two companies, Kornit Digital will supply printing systems, ink, and support services in the framework of the Merch by Amazon program involving on-demand personalized design of shirts. Amazon did not undertake to order a minimum number of machines from Kornit.
The agreement includes an allocation of five-year options to Amazon to purchase up to 2.93 shares in Kornit (8% of the company’s share capital) at an exercise price of $13.05 per share – the average Kornit share price over the 30 days preceding the signing of the deal. The number of options to be exercised depends on the volume of products and services that Amazon buys from Kornit (Amazon will exercise all the options and proceeds from the options will total $38 million if Amazon buys at least $150 million worth of products and services from Kornit).