24 May 2012 More Money in Microstock

The last couple of weeks have been quite exciting for the microstock industry. The top three agencies have all had significant financial news.

Shutterstock Files for $115 Million IPO

The first announcement came last Monday when Shutterstock filed listing documents.

They’re seeking $115 million, though that figure could change before they list.

They’ll list on the New York Stock Exchange under stock code SSTK.

The announcement came as no surprise to those watching the industry: recent board-level hires all had public company experience; a full re-branding was executed the week prior; and, some less-than-discreet consultants leaked news of a piqued interest in the microstock industry from the financial sector.

The highlight detail of the S-1 was Shutterstock’s revenue of $120 Million for 2011, placing it “very close” to Fotolia but less than half of iStockphoto. Profit for the same year was $21.9 million.

Fotolia Raises $150 Million

The very next day, Fotolia announced that they had closed a deal for $150 million from listed private equity firm KKR.

KKR also arranged a further $150 million loan for Fotolia.

The Financial Times reported that the $150 million investment was for a 50% stake, valuing Fotolia at $300 million. It also noted the deal was a partial exit for 2009 Fotolia investor TA Associates, who retains “just under a third” of the company.

Hellman & Friedman Considers Re-listing Getty

And not to be left out, iStockphoto participated too, via parent company Getty Images.

Getty owners, Hellman & Friedman, were reported to have hired Goldman Sachs and JPMorgan Chase to investigate the possibilities for sale or IPO (re-listing) of the business.

This comes shortly after news that Hellman & Friedman had taken another dividend of $379 million, funded by a $275 million loan in Getty’s name, which together with the $496 million dividend in 2010, repaid much of the $941 million they spent taking Getty private.   Getty’s 2011 revenue was reported to be $945 million.

Implications for Microstockers

Will we benefit from the opening of the Shutterstock books when they become a public company?   Unfortunately not.   While there’s a lot to be learned about the business from the listing documents (some of which is true and accurate), new legislation grants them limited reporting responsibilities as an ‘Emerging Growth Company’.

Will we be able to have a say in how Shutterstock is run?   Fortunately not.   Founder & CEO, Jon Oringer, and other existing investors will still own over 50%, leaving them with full control.

In the bigger picture, large cash injections at two of the top three agencies will only deepen their dominance over the smaller agencies which help keep them honest. KKR even stated their intention to “consolidate the fragmented market”. This may not be positive for microstockers in the long term.