Published in Globes on May 16, 2017
The Fortissimo Capital investment fund sold shares in Kornit Digital (Nasdaq: KRNT) for $90 million early this year. The Kornit share has since continued its climb, and Fortissimo is now planning to sell more of its holdings in the company for up to $108 million. Managed by Yuval Cohen, Fortissimo is the largest shareholder in Kornit, which manufactures and markets industrial digital printers for printing on cloth and wearable items. Managed by CEO Gabi Seligsohn, Kornit’s share price has risen 75% this year, bringing the company’s market cap to $742 million.
As of the end of February (the most recent reporting date), Fortissimo held 26.3% of Kornit’s share capital, the current value of which is $195 million. The company yesterday reported Fortissimo’s intention of making an offer for sale for 4.25 million of its shares in Kornit, worth $94 million at the current market price. The underwriters for the offering are Barclays and CitiGroup, who will be given a 30-day option to buy 638,000 more shares with a current value of $14 million.
Assuming that Fortissimo also sells the additional shares, its holding will fall to 11% of Kornit. Fortissimo acquired a controlling interest in Kornit in 2011 with an investment of only $16 million, at a company value of $23 million, meaning that Kornit’s value is now 32 times as much. Before its holdings were diluted by Kornit’s 2015 Nasdaq IPO, Fortissimo owned 70% of the company.
Kornit’s IPO was at $10 a share, after the company had to lower the value it was seeking in the offering, and raised less than it had been hoping. On the first day following the IPO, however, the share price skyrocketed 40%. To date, since the IPO, the Kornit share price has more than doubled its value, and is now trading at close to its record (the record share price of $22.40 was recorded a week ago, compared with $22.20 now).
In early 2017, Fortissimo had a 48.5% stake in Kornit, and sold some of its holding at $16.50 per share, raising $90 million. Demand for the offering was heavy; in addition to Fortissimo, Seligsohn also sold shares for $1.5 million, and now owns a 1.5% stake in Kornit with a market value of $11 million.
In addition to the offer to sell, Kornit itself issued new shares, gaining $38 million in the process. The offering took place shortly after Kornit announced a multi-year cooperation agreement with Amazon, in which Kornit will supply Amazon with printing systems, ink, and support services in the framework of the Merch by Amazon plan. This plan involves personalized printing of shirts designed on demand. The agreement enables Amazon to buy 8% of Kornit’s shares at $13.04 a share as a function of $150 million in purchases from Kornit over a five-year period.