February 6, 2010 / 5:37 AM / 10 years ago

Quattrone likely to help QuinStreet IPO

NEW YORK (Reuters) - The fact that Frank Quattrone is working alongside Credit Suisse to bring Internet marketing company QuinStreet Inc’s initial public offering to market next week might help QuinStreet, despite the duo’s rocky history.

“In a world when there are so many investment opportunities, I think quite frankly it’s a positive to have Quattrone involved because I think it’s going to cause people to look twice at the offering,” said David Dietze, Chief Investment Strategist at Point View Financial Services in Summit, New Jersey.

Quattrone is known for his hot tech deals — he helped bring Amazon.com Inc (AMZN.O) and Cisco Systems Inc (CSCO.O) public — but while an employee at Credit Suisse CSGN.VX, he also ran afoul of U.S. authorities who said he encouraged staff to destroy documents the investigators wanted for a probe of IPOs.

They dropped the charges, but Quattrone spent years trying to repair his tarnished reputation. Now nearly two years after launching his own firm he’s back in the IPO business working alongside his former employer.

“The general consensus was that he pushed hard, was very aggressive, but at the end of the day it was not something that would necessarily cause you to say ‘I don’t want my money anywhere close to that man,’” Dietze said.

QuinStreet makes money on Internet marketing. Analysts warn that too much of its revenue is concentrated with too few customers but say its growth prospects are compelling.

QuinStreet has grown its revenue for the past five years and only saw its profits dip in 2008 before recovering to higher than pre-downturn levels in 2009.

The company in its online roadshow forecast annual revenue growth of about 15 percent to 20 percent.

“I think the markets are going to have to settle down and find some sort of a bottom here. Without that any IPO is going to have a questionable start irrespective of its quality,” said IPOfinancial.com President David Menlow.

IPOs have struggled recently amid broader equities market instability. Investors have avoided unproven companies with weak financials and deals designed to pay off debt or existing shareholders. Many companies have postponed or canceled their IPOs, or settled for lower proceeds.

DEALMAKING CHOPS

The mustachioed Quattrone has advised billions worth of deals. When he wrapped up his legal troubles and co-founded Qatalyst in March 2008 he had statements of support from heavy hitters including Google Inc (GOOG.O) Chairman and CEO Eric Schmidt and Intuit Chairman and Apple board member Bill Campbell.

Qatalyst then went on to advise Google on Microsoft Corp’s (MSFT.O) attempted takeover of Yahoo Inc YHOO.O and Brocade Communications Systems Inc BRCD.O on its acquisition of Foundry Networks Inc.

Qatalyst now stands to make millions on Foster City, California-based QuinStreet’s IPO.

Qatalyst, which employs 23 people, acknowledged that both Quattrone and Jonathan Turner, a Qatalyst co-founder and former vice president of QuinStreet, were working on the IPO.

Credit Suisse declined to comment. QuinStreet did not return calls for comment.

QuinStreet, which is scheduled to price its IPO next Wednesday, expects to raise about $180 million at the midpoint of its price range.

The company stands to net between $165.1 million and $190.2 million, depending on the over-allotment. Qatalyst stands to make $2.52 million in advisory fees and an additional $378,000 if the underwriters — Credit Suisse, Bank of America Merrill Lynch and J.P. Morgan — sell their additional shares.

Analysts expect the tech sector to produce a number of IPOs in 2010, and say the venture capital-backed pipeline will grow. Facebook, LinkedIn and Zynga have all been identified as prime IPO candidates.

One of the tech executives who gave a statement of support at Qatalyst’s launch, then-Facebook Chief Financial Officer Gideon Yu, is now at venture capital firm Khosla Ventures.

Reporting by Clare Baldwin in New York; Editing by Nick Macfie

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