Online IPO Scores Modest Success for Ravenswood

In an innovative first-time stock offering that allowed individual investors to set share prices and buy stock directly online, Ravenswood Winery Inc. of Sonoma’s stock rose 38 cents Friday to close at $10.88 in its Nasdaq debut.

The initial public offering, or IPO, was priced Thursday night at $10.50 a share and was underwritten by San Francisco investment bank W.R. Hambrecht & Co. through its “OpenIPO” system. The “Dutch auction” format is designed to give little investors a better shot at buying IPOs through an online bidding process, while cutting costs for the company going public.

Shares of popular IPOs are often snapped up by large investors and institutions. In a Dutch auction, all shares are sold at the “clearing price,” the lowest bid at which all shares can be sold.

Ravenswood received more than 3,000 bids, with 65% of the shares sold to individuals and the rest to institutions, said Sharon Smith, a spokeswoman for W.R. Hambrecht.

“We were extremely pleased--it priced within the range, and we got a very strong number of bids,” Smith said. Shares, however, went at the low end of the estimated $10.50-to-$13 range.

Retiree Tony Maruca, an IPO investor who lives on Martha’s Vineyard near Cape Cod, Mass., said he got a call Thursday night saying his online bid to buy 100 shares was accepted.

“It’s my first exposure to this OpenIPO thing,” said Maruca, 66, “and it was extremely appealing. It lets people interested in the stock have a more level playing field. Whether you are Morgan Stanley or Fidelity or Joe Blow, on the Internet you are just another bid.”

However, Ravenswood’s stock, trading under the ticker RVWD, saw only modest first-day price gains, while two Internet-related IPOs soared Friday.

The IPO market is increasingly becoming two-tiered, as tech offerings rocket while non-tech offerings lag.

Shares in networking software maker Extreme Networks Inc. more than tripled Friday in their first trading day, while stock of teen-oriented Web site operator ITurf Inc. surged 177% after its IPO.

Still, Ravenswood investors such as Maruca said they didn’t expect a stellar opening performance.

“It’s not a ‘dot com’ or anything--we just like the product,” he said.

Justin Faggioli, a spokesman for Ravenswood, said he could not comment on the deal because the firm is still in the Securities and Exchange Commission-imposed “quiet period” that prohibits executives from discussing their firm’s new stock.

The deal gives Ravenswood a market value of nearly $50 million.

Ravenswood plans to use $10.5 million in proceeds from the deal to expand its facilities and inventory, the firm said in earlier filings.

Ravenswood primarily produces red wine. Zinfandel accounts for 65% of its sales.

W.R. Hambrecht was started by Bill Hambrecht, a wine aficionado, in 1998 after he left Hambrecht & Quist, the investment bank he co-founded.