The shares in Riverdeep, the educational software company, set up by former schoolteacher, Mr Pat McDonagh, fell a further 10.4 per cent to $50 3/8 on Nasdaq last night. This brings the value of Mr McDonagh's 48.6 per cent shareholding down to $667.5 million compared with $951 million after the company's first day of trading last Thursday.
The falls on Friday, and yesterday, are attributed to profit-taking after the spectacular rise from the float price of $20. The price of the American Depository Shares (ADS) - each ADS represents six ordinary shares - ranged from $49.50 to $51.34. In Dublin the ordinary shares fell from $9.75 to $8.35, before recovering to $8.70 in a late deal.
The size of Riverdeep has been increased following the exercise of options. Credit Suisse First Boston (Europe), acting through its associated company, Credit Suisse First Boston, as stabilisation manager for the initial public offering (IPO), has exercised in full the over-allotment option granted to it, by the company, and certain selling shareholders, over 5,475,000 ordinary shares at $20 per share. This has increased the initial offering by 15 per cent from 36.5 million ordinary shares to 41.975 million. The equity of the company has been increased by 3.3 per cent.
The option over these shares was taken into account in the IPO document which showed Mr McDonagh's shareholding going down from 65.6 per cent to 48.6 per cent after the IPO and the exercise of the options. The options were exercised earlier than expected because of the strong share price. The investors who received the new shares, under the options, were the same who participated in the IPO.
