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Sandvine Goes Public on London Exchange

Capitalizing on the buzz surrounding so-called "net neutrality" issues, service control switching start-up Sandvine Inc. completed an institutional placement and initial public offering (IPO) yesterday that netted the company £18.3 million (US$32 million). The placement of 33.5 million common shares at 75p each valued Sandvine at £86 million, equal to US$150 million. Public trading of Sandvine shares under the symbol "SAND" started at 97p yesterday and closed at 102p today, boosting the company's market cap to £117, or just over US$200 million, exactly what Cisco Systems paid for Sandvine competitor P-Cube Inc. in August 2004. So why is Waterloo, Ontario-based Sandvine trading on the London AIM? It's the preferred market of one of Sandvine's key backers, Sir Terence Matthews, the Canadian telecom titan who founded Newbridge Networks Corp. and sold it to Alcatel for US$7 billion (U.S.) in 2000. Sir Terrence is a fan of the London exchange as investors who hold shares for at least three years can avoid the 15% long-term capital gains tax on stock profits seen in the U.S. Sandvine's successful IPO boosts the fortunes of Ellacoya Networks, another privately-held service control start-up. At the same-time though, Sandvine's reported revenues and losses for 2005 serve to chill the red-hot hype about service control technology, which helps broadband providers to manage and prioritize Internet applications. Sandvine's 2005 revenues clocked in at only US$13.5 million, yielding a loss of US$2.5 million for the year.
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