NEW YORK Zipcar Inc, a car-sharing service popular among college students and city residents, priced shares above the proposed range and its stockholders sold more shares than expected in the IPO on Wednesday, a market source said.
The IPO raised $174.3 million with shares pricing at $18 each. The company and its stockholders had planned to sell 8.3 million shares for $14 to $16 each. The stockholders sold some 1.4 million shares more than expected, according to the source, who spoke on condition of anonymity because the details have not been officially released.
Zipcar, founded nearly a decade ago, is a leader in so called car-sharing, a service that allows customers to rent cars at an hourly or daily rate and often park in convenient reserved spots. Customers also pay annual membership fees.
The service is popular in urban areas and around universities, where fewer people own cars and parking is scarce and expensive.
The model has caught on so much that larger car rental companies such as Hertz Global Holdings Inc, Enterprise Holdings Inc and U-Haul, owned by Amerco, have started rival car-sharing services.
Among Zipcar's venture capital investors are Steve Case's Revolution Living, which will own more than 17 percent of the company after the IPO, Benchmark Capital, Greylock Partners and Smedvig Capital, which planned to sell shares in the IPO.
The company has incurred losses every year since its creation, mounting to an accumulated deficit of $65 million in 2010, according to a filing with U.S. Securities and Exchange Commission.
Zipcar warned investors of a net loss expected in 2011.
In the filing, Zipcar explained that, as with any other car rental service, many of its expenses are upfront fixed costs of building up the fleet of cars before people actually reserve and pay for them.
Zipcar's revenue, however, has been climbing. It grew 42 percent to $186 million in 2010 after adding 24 percent the year before.
Zipcars are in 14 big cities and 230 college campuses around the United States, Canada and the United Kingdom. To expand further in Europe, a year ago, Zipcar bought a British peer, Streetcar Ltd.
In February, the company also added former eBay Inc CEO Meg Whitman to its board.
Zipcar shares are expected to begin trading on Nasdaq under the symbol "ZIP" on Thursday.
Goldman Sachs and JPMorgan led underwriters on the IPO.
(Reporting by Alina Selyukh; editing by Andre Grenon, Gary Hill)