E-commerce software provider NetSuite starts accepting bids on its shares
NetSuite Inc., a provider of e-commerce and other business software for small and mid-sized companies, began today taking bids on the 6.2 million shares in the company it plans to sell in an initial public offering of stock. The company expects shares will begin trading publicly next Monday, and estimates it will net $80.9 million from the IPO.
NetSuite is using a so-called Dutch auction process, similar to the one Google used in its IPO three years ago, giving smaller investors more access to the company’s shares than they normally would when shares are sold in big blocks by underwriters. The company projects a share price of $13 to $16 and says a price of $14.50 would net the company $80.9 million after IPO expenses.
The company projects using the proceeds to pay off an $8 million debt to Tako Ventures, a company owned by Oracle Corp. CEO Lawrence Ellison, who is the major shareholder in NetSuite. Oracle provides similar software to NetSuite’s but targets larger companies. To avoid any potential conflict of interest, Ellison is transferring the 32 million NetSuite shares he owns to a company whose sole purpose is to hold those shares and make charitable contributions from the proceeds at Ellison’s direction.
Besides paying off the $8 million debt, NetSuite says it will use the proceeds of the IPO for operating expenses and possibly to make acquisitions. The company is selling 10.4% of its shares to the public in the stock offering.
NetSuite’s software uses a centralized database to provide client companies with integrated services in three areas: e-commerce; enterprise resources planning, which includes accounting and planning; and customer relationship management. NetSuite hosts the software and clients access it via web browser, which CEO Zach Nelson says provides smaller companies with sophisticated software without the complexity of maintaining the technology. “They run their business, we run the software,” Nelson recently told analysts.
NetSuite says it generated revenue of $67.2 million in 2006, up from $17.7 million two years earlier, and had revenue of $76.8 million in the first nine months of 2007. The company reported a loss of $35.7 million in 2006 and of $20.6 million for the first three quarters of this year. NetSuite had 5,400 active customers as of Sept. 30.
Credit Suisse Securities LLC is acting as principal manager for the IPO, with W.R. Hambrecht and Co. LLC as co-manager.
Back...
