Two major investments paid off for Auckland-based venture capital firm IT Capital last week.
Tunes.com - in which IT Capital invested $US500,000 during May - has signed a deal to be bought by EMusic.com to the tune of $US130 million.
Tunes shareholders will receive 10.6 million shares of EMusic.
IT Capital claims EMusic is the largest seller of digital music on the Web. Through exclusive licences, they have obtained the digital rights to about 500,000 tracks of music.
The directors and management of IT Capital will release further information on the timing and expected size of the returns as it becomes available.
In a second major return on investment IT Capital announced it has exited an investment made last month in BMCMedia.com's IPO (initial public offering).
The firm sub-underwrote the BMCMedia. com IPO and invested $A250,000, receiving 500,000 BMCMedia.com shares. After deducting IT Capital's commission the return is $A277,392.
IT Capital has retained 100,000 shares in BMCMedia.com as it is a developing market segment that it wishes to pursue and it gives IT Capital a retained investment which is good for further growth into this rapidly expanding market, says IT Capital managing director Keith Phillips.
"Following on from our success in Tunes. com this performance proves our ability to identify leading Internet stocks and to exit them successfully," says Phillips.
"We chose to exit the deals as there was a good return on them, because they were tactical rather that strategic investments. They demonstrated our ability to buy and sell technologies," says Phillips.