MercadaoLibre Had Big Debut Friday, eBay Holds 18.5% Stake

Includes: EBAY, MELI
by: Eric Savitz

Friday was another rough day for the market, but things were good indeed for MercadoLibre (NASDAQ:MELI), a Latin American eBay (NASDAQ:EBAY) clone that went public at $18 a share, in a deal backed by J.P. Morgan, Merrill Lynch, RBC Capital and Pacific Crest. The Buenos Aries-based company sold 16,077,185 shares, including 2,608,696 from the company, and the rest from a very long list of selling stockholders.

The web sites - the company operates in 12 Latin American countries - look a lot like eBay. The company even has a PayPal-like payment service called MercadoPago. MercadoLibre and eBay had a strategic relationship for six years; although a non-compete agreement recently expired, eBay holds an 18.5% stake in the company after the offering, a stake worth about $209 million. When they formed their partnership, eBay sold its Brazilian unit to MercadoLibre.

One thing worth noting is that the list of selling holders includes all of the company’s senior executives; CEO Marcos Galperin, who started the company while an MBA student at Stanford, sold 1,786,433 shares in Friday’s offering, netting him proceeds of more than $32 million; he still owns just over 6 million shares, a stake worth roughly $150 million. Other sellers include the CFO, the COO and the CTO, other employees, and various venture investors, including affiliates of Goldman Sachs, J.P. Morgan and HM Capital, which is better known by its original name, Hicks Muse.

MeradoLibre shares Friday were up $7.40 at $25.40; with about 43.8 million shares outstanding, the company has a market cap of $1.1 billion.

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