NetSuite IPO Rakes In $161M

NetSuite has sold 6.2 million shares to investors in a Dutch auction this week, raising a healthy US$161 million.

The haul from its long-awaited initial public offering came in spite of — or perhaps because of — its moving target price. NetSuite ultimately debuted at $26 per share after jumping from a target price of $13 to $16 per share to a target of $16 to $19 per share.

In short, the IPO was a success, Fred Ruffy, analyst with the investor education firm Optionetics told CRM Buyer, and the company was dead-on with its price target. By increasing it more than $10 per share from the first target, it was able to raise twice the expected amount.

‘N’ Is for ‘NetSuite’

The stock, which is trading under the symbol “N,” closed Thursday at $35.50, up 37 percent from its IPO price.

On Friday morning, the stock continued to trade up to a high of almost $46 a share. It was up $6.50 to $42 in midday action.

The timing was right, because NetSuite’s debut on the New York Stock Exchange coincided with a broader rally in the technology sector, Ruffy observed.

“The advance was sparked by an upbeat earnings report from Oracle,” he noted. Shares of Oracle were up 8.3 percent on the heels of its earnings announcement Wednesday afternoon, and the rally helped boost investor confidence in the Larry Ellison-backed NetSuite.

“In sum, Oracle helped spark two days of strength in the technology sector, and that in turn provided an ideal market environment for NetSuite’s IPO, which has been hotly anticipated to begin with,” remarked Ruffy.

SaaS Market

Now, the question is whether the share price can stay at its current high level. The offering of 6.2 billion shares represents a 10 percent stake in the company, Ruffy said, which means that at $42 a share, NetSuite’s total market value is roughly $2.6 billion.

With the IPO under its belt, NetSuite joins Salesforce.com and RightNow as publicly traded entities. NetSuite plans to use the proceeds to make acquisitions, among other plans, according to filings with the Securities and Exchange Commission.

In the Software as a Service community, that means the company will likely be going to market with a wider array of functions than it has already built out in its front-office/back-office suite.