U.S. Book Publisher Considers an IPO in Canada

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These days, as book publishers resort to cheering themselves up with homilies like "flat is the new up," here's yet another sign that pay-to-publish firms are booming: Lulu.com, a publishing company in Raleigh, N.C., that lets authors publish their own books and sell them directly to their audiences, is set to launch an initial public offering. The IPO is planned for Canada and is worth approximately $48.25 million. Helping take Lulu public are underwriters Genuity Capital Markets and CIBC World Markets, Dow Jones Newswire has reported.At first blush, Canada may seem an odd choice for the debut, but the move may work for several reasons. U.S. companies can still sell shares, and once established on the Canadian stock market, Lulu could transfer over to an American-based listing, as Salix Pharmaceuticals did in 1996, starting life as a Canadian IPO before moving over to Nasdaq.

%%DynaPub-Enhancement class="enhancement contentType-HTML Content fragmentId-1 payloadId-61603 alignment-right size-small"%% IPOScoop.com publisher John Fitzgibbon further explained to the Raleigh News & Observer that because Lulu is listing its stock in Canada, it "will likely pay less in costs than an IPO on a U.S. exchange, and Lulu won't have to submit to the same rigorous regulatory scrutiny."

Strong Canadian Equity Markets

Also, Dow Jones's report notes that Lulu.com is eyeing an IPO "at a time when Canadian equity markets have been strong and, more importantly, the IPO market has shown signs of revival." There were 28 new issues worth C$1.8 billion ($1.75 billion) on the Canadian exchanges in 2009, compared with the C$682 million ($663 million) raised from 57 new issues in 2008. And while Lulu.com has offices in Bangalore and London, its more significant presence is in Toronto: Owner Bob Young, co-founder of open-source software company Red Hat (RHT), grew up in Canada and owns the Hamilton Tiger-Cats of the Canadian Football League.

Whether it's actually a good time for Lulu to go public is up in the air. The company, which says it has published more than half a million titles in 2009 and that it has 15,000 new authors from 80 different countries signing on each week, reports that revenue rose 37% from 2007 to 2008 but did not say if it turned a profit. Still, any signs of growth could make Lulu.com an attractive company for potential shareholders, and a good share price might also entice other successful pay-to-publish firms to gamble on a public offering.
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