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Zipcar prepares for IPO

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Zipcar Inc., a U.S. car-sharing service popular among college students and city dwellers, said it expects to sell about 8.3 million shares at $14 to $16 US apiece in its initial public offering.

The company said it expects net proceeds of $89.2 million based on the midpoint of the planned IPO range. Zipcar plans to use proceeds to pay down debt and for business expansion, according to documents filed with the U.S. Securities and Exchange Commission Wednesday.

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. Customers must pay annual membership fees as well.

The service is successful in markets in urban areas and colleges, where fewer people can afford owning cars and parking is scarce and expensive.

The company has posted losses every year since it was founded, including $14.1 million last year, and expects another loss this year, according to the SEC filing. Revenue has grown from almost $31 million in 2006 to $186 million last year.

The market has been successful enough that larger car rental companies such as Hertz Global Holdings Inc., Enterprise Holdings Inc. and U-Haul have started rival car-sharing services.

In the amended SEC filing, Zipcar said it plans to sell 6.67 million shares, while stockholders will sell an additional 1.67 million shares.

Among its 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.

The underwriters have the option to purchase up to an additional 1.25 million shares depending on demand.

Zipcar added former eBay Inc. CEO Meg Whitman to its board in February. It bought out Streetcar Ltd. last year to expand it European business.
   
Zipcar members number more than 560,000 in 14 major cities and more than 230 college campuses in the United States, Canada and Britain.

Goldman Sachs & Co and JPMorgan are underwriting the offering. The shares are expected to trade on Nasdaq under the symbol "ZIP."

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