SRAM's IPO Prospectus: Half Billion Dollar Company is to Recapitalize

CHICAGO, USA – On May 13 SRAM announced that it wants to go public. The company’s IPO prospectus reveals that sales of the in 1987 founded component maker, have been growing at a compound annual rate of 16.6 percent since 2006. 2010 net sales of SRAM stood at 524.2 million US dollar.

Two weeks before the IPO announcement a new company was established called SRAM International Corporation. It will be the holding with full ownership of SRAM LLC.

According to a preliminary prospectus filed with the US Securities and Exchange Commission, SRAM’s Initial Public Offering (IPO) is expected to raise about 300 million US dollar. SRAM International Corporation will mainly use these proceeds to retrieve the 37.8% stake Trilantic Partners, formerly Lehman Brothers Merchant Bank, holds in SRAM.

Trilantic Partners invested 234.8 million US dollar in SRAM on Sept. 30, 2008. To repay Trilantic together with a 10% annual preferred return, the component maker will, prior to the IPO, enter into a new credit facility. The proceeds from the IPO would be used to repay the new credit facilities.

In its prospectus SRAM says to currently hold a 15% share in the global market for bicycle components which is estimated to be worth about 3.5 billion US dollar. After a heavy 2009, last year proved very successful for the international operating component maker. Net sales grew 31.2% to 524.2 million US dollar; gross margin stood at 40.3% while net income increased by 130% to 50 million US dollar. SRAM makes most of his money (about 60%) with OEM sales and the rest in the Aftermarket.

In 2010 Taiwan was SRAM’s number one market with sales of 181 million US dollar, followed by the US with 80 million and Germany with 65 million. The biggest parts of SRAM’s turnover is made with MTB components (62%); roadrace represents 26% of the 2010 revenues while the pavement sector stands at 12%.

J.P. Morgan Securities LLC, BofA Merrill Lynch and Morgan Stanley will be acting as joint book-running managers for SRAM’s IPO. Baird, Lazard Capital Markets, Piper Jaffray and Stifel Nicolaus Weisel will be acting as co-managers.

Copies of the preliminary prospectus, can be obtained from:

J.P. Morgan Securities LLC
Attn: Prospectus Department
c/o Broadridge Financial Solutions
1155 Long Island Avenue
Edgewood, New York 11717
Telephone + 1 866-803-9204