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Financial Software - Wednesday, December 9, 2009

Nobel Prize Winning Founder of Retirement Manager Financial Engines Plots IPO

Financial Engines plans to sell up to an estimated $100M of stock in an IPO. The company sells retirement investment management and advice. It targets large corporate retirement plan sponsors and as of Sept. 30 had signed contracts to make its services available through 107 Fortune 500 companies and seven Fortune 20 companies.

Financial Engines sells its service to companies that pay a startup fee of anywhere from $2,500 to $50K and an annual fee of $30 to $50 per 401k enrollee. The software analyzes variables of plan-holders -- such as salary, age, income, and other investments as well as the macro-economic picture.

Financial Engines has posted a loss every year since 2006, and through the first nine months of 2009, it recorded profit of $1.6M, compared with a year-earlier loss of $1.5M. Revenue was up 13% at $58.8M.

The firm was cofounded in 1996 by Nobel Prize-winning economist Bill Sharpe, who was awarded the 1990 Nobel Prize in Economics. Cofounder and board member Joseph Grundfest was former commissioner of the Securities and Exchange Commission.

Financial Engines had planned an IPO back in 1999, three years after its founding in 1996. It has raised $122M+ from a roster of investors including by Oak Hill Capital Partners, American International Group, Chase Manhattan, Chase H&Q, ETrade, Goldman Sachs, Intel, Merrill Lynch, Thomas Weisel Partners, State Street Global Advisors, Washington Mutual, and Wells Fargo. It last raised $20M in 1999.

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