Early fruit from family trees for online firm

Ancestry.com, the world's largest online provider of family histories, surged in its first day of trading after raising $100 million in an initial public offering.

The Provo, Utah-based company advanced 70 cents, or 5.2 percent, to close at $14.20 on Thursday. Ancestry.com, private-equity firms Spectrum Equity Investors and W Capital Partners, and other owners sold 7.41 million shares at $13.50 each, the midpoint of its forecast range in its IPO Thursday. The sale valued the company at about $572 million, and the shares trade under the ticker ACOM.

Ancestry.com includes a Web site based in downtown Bellevue, myfamily.com. The site, which launched in December 1998, allows people to create a family or group Web site quickly.

Ancestry.com is the second U.S. company IPO in November.

"They're the leader in the market," said Eric Guja, an analyst at Renaissance Capital. "Their profit margins are impressive."

Earnings after the cost of sales is deducted represented 78 percent of Ancestry.com's revenue in 2008, matching the margin at Microsoft during the past four quarters.

September and October were the busiest two months for offerings in almost two years, as sellers took advantage of a more than 50 percent rally in the Standard & Poor's 500 index from its March low to unload shares.

Initial sales evaporated in the fourth quarter of last year after Lehman Brothers filed the world's largest bankruptcy and spurred a credit-market freeze.

Ancestry.com, which provides subscription-based genealogical information over the Internet, will receive 55 percent of the proceeds from the IPO, according to a regulatory filing before its share sale. The remainder will go to shareholders including the trust of James Sorenson, once Utah's richest man. He died in 2008. The underwriters have the option of buying an additional 1.1 million shares.

The company, which had $115 million in long-term debt at the end of September, will use some of its proceeds to pay down $12.1 million in borrowings, the regulatory filing showed.

Ancestry.com earned 30 cents per share in the first nine months of 2009. At the $13.50 IPO price, the company is valued at 33.8 times profits over a full year, data compiled by Bloomberg show. That's less than the average 42 times estimated 2009 profits for U.S. Internet software and services companies.

Separately, Hyatt Hotels, the chain controlled by Chicago's Pritzker family, climbed $3, or 12 percent, to close at $28 on Thursday after raising $950 million in the third-largest U.S. initial public offering this year. Its ticker symbol will be H.