NetSuite confirms IPO at $26 a share

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NetSuite, the Software-as-a-Service (SaaS) provider has gone public, after completing its innovative Google-style auction floatation.

The US-based business software provider sells a hosted business software suite covering everything from CRM to accounting and logistics management. It has a large number of users in the UK, including companies such as Carphone Warehouse.

Zach Nelson, chief executive of NetSuite rang the ceremonial bell (see picture) at the New York Stock Exchange to open the day's trading late yesterday, to mark the start of trading in NetSuite shares. The company has been working on the floatation since July, when it filed Initial Public Offering (IPO) papers with the US Securities and Exchange Commission.

Shares hit the market at $26 (£13) a share, far higher than the original stated range of $13-$16 a share. The original plan was to raise around $99 million from selling 10.4 per cent of the company, giving the company a valuation of around $950 million (£475 million). The higher opening price will give the company a windfall of around $80 million (£40 million) over and above what the company had planned to raise.

The floatation values the business at around $1.6 billion (£800 million).

Due to the 40 day quiet period the company is currently operating in, NetSuite executives were unable to comment on future financial activities or make future looking statements about the company.

The IPO was 16-times oversubscribed, with bids coming in for 100 million shares, despite only 6.2 million shares being available, helping to drive up the price.

"We are extremely happy with the share price. It is a tough market for technology stocks, so to be able to come in so high over the target range is a real bonus for NetSuite," a source close to the floatation said.

The NetSuite IPO differed from most floatations in its use of a online auction to sell its shares rather than a conventional broker-based sale. Bidders were able to make their bids directly, rather than having to go through a stockbroker, though a broker could be used if a buyer wished. The process is very similar to the one used by search engine Google for its IPO back in 2004.

Bidders who made offers for NetSuite stock at or above the eventual selling price can expect to get around 60 per cent of the shares they bid for in most cases, one source added.

The company plans to update investors and analysts on its progress in mid February, following the completion of its financial quiet period.

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