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French online start-up Criteo shares pop in market debut

By Leila Abboud and Jennifer Saba

NEW YORK/PARIS (Reuters) - Shares in French online advertising firm Criteo rose more than 30 percent in its stock market debut on Nasdaq on Wednesday, showing investor appetite for technology start-ups and delivering a payday to its venture capital backers.

Shares in the company, which uses tracking technology to target ads at consumers surfing the web, opened at $31 and were at $41.40 by 1625 GMT, giving the eight-year old start-up a market capitalization of roughly $2.3 billion.

The sale of 8.08 million shares raised $250 million for the Paris-based company that will be used to fuel its international expansion and growth.

The size of the sale and the initial price were raised twice because of investor demand.

The success of Criteo's share sale is a sign of investor interest in technology listings against the backdrop of a broader rally of the S&P 500 information technology index and just weeks before the much-anticipated market debut of social network Twitter.

Criteo is one of a number of companies, including Google and Facebook, to benefit from the on-line ad boom, the result of major companies following their audience to the web and away from newspapers and magazines.

Founded in Paris by Jean-Baptiste Rudelle in 2005, the start-up became a darling among online advertisers by boosting the rate at which Internet surfers click on display ads.

The company developed a technology known as "re-targeting" which catches users who have visited a shopping website without buying anything, and then showing them ads for similar items on other sites to tempt them back.

Criteo's customers, including travel website Hotels.com, telecom operator Orange, and retailer Macy's, only pay when a web surfer actually clicks on the ad.

In a rare move among French start-up founders, Rudelle moved to Silicon Valley to expand the company that is in 37 countries.

"The U.S. is our number one market today, and a very strategic market for us," said Rudelle, explaining the choice of listing in New York instead of Paris.

"Being listed on the Nasdaq says that we are here to stay and committed to our clients and partners."

Criteo has roughly doubled its revenues every year since 2010 to reach 271.9 million euros in 2012. It made a profit of 800,000 euros last year but swung to a loss of 4.9 million in the first six months of 2013 because of increased investments.

There have been 26 U.S. technology listings this year, according to Thomson Reuters data, compared with 30 in 2012.

The sale could herald a pay-day for venture capital firms, which have ploughed some $64 million into Criteo.

Geneva-based Index Ventures was the largest shareholder with a 23.4 percent stake before the share sale. Others include Idinvest Partners with 22.6 percent, Elaia Partners with 13.5 percent and Bessemer Venture Partners with 9.5 percent.

All the funds will be selling relatively small portions of their stakes in the listing, according to the offer documents.

Rudelle will own 8.4-8.6 percent of the group.

JP Morgan, Deutsche Bank Securities and Jefferies are the lead underwriters for the issue.

(Additional reporting by Alexandre Boksenbaum-Granier in Paris; Editing by Jane Merriman)

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