Morning Report: Mulesoft’s initial public offering seems to be off to a good start, which should comfort public and private investors.
With Snap Inc’s debut on public markets out of the way, it feels like it’s time for a backlog of IPOs to make their way through the pipeline. Today, shares in Mulesoft, an enterprise software company that helps organizations build application networks, go public on the New York Stock Exchange under the ticker symbol MULE.
The San Francisco-based company announced late Thursday evening that it would be pricing the initial public offering of 13 million shares of its Class A common stock at $17 per share. The opening bid was $24.25 per share, up 42.6%.
Its underwriters, Goldman Sachs, J.P. Morgan Securities, and BofA Merrill Lynch, retain a 30-day option to purchase up to 1,950,000 additional shares of Class A common stock at the IPO price. Meaning, as of today, Mulesoft’s IPO has netted $221 million with the potential for an additional $33.15 million to come. Before ultimately pricing its shares at $17, Mulesoft raised its IPO price range from $12-14 to $14-16, a move that signaled optimism on behalf of the company and its underwriters.
This is a significant increase, by a factor of around 51%, from the last private market share price of $11.23. Mulesoft’s last private round was a $128 million Series G in May 2015, which was led by Salesforce Ventures and saw participation from other corporate investors like Cisco Investments and ServiceNow—all of which are clients of Mulesoft. Since its inception in 2006, the company has raised a total of $259 million, and its initial market cap at IPO is $2.14 billion, producing an 8.26x multiple on invested capital (MOIC), which is a solid exit by most standards.
According to analysis by Equityzen, some of the biggest winners in Mulesoft’s IPO are its earliest investors. Here’s a selection of some of the returns, based on the historical share price compared to the $17 per share IPO price:
- Shares purchased in Mulesoft’s $4 million Series A round are worth $304.5 million, a 74.2x MOIC.
- The $12.5 million Series B is now worth $278.2 million, a 22.25x MOIC.
- Mulesoft’s $12 million Series C is now valued at $263.2 million, a 21.9x MOIC.
Multiples like this are likely to reassure investors in other, more mature “unicorns” still waiting to go public.
Although Snap Inc.’s IPO was flashy, Mulesoft might be the one to which investors in both public and private tech companies anchor their expectations of the tech IPO market going forward.
After Snap Inc., Mulesoft is just the second American tech company to go public this year, but it’s certainly not going to be the last. On Monday of this week, two other enterprise software companies, Okta and Yext, filed their preliminary IPO paperwork with the SEC. (Here’s Okta’s S-1 and Yext’s.) Other major IPOs waiting in the wings include:
- Data analytics company Alteryx, which filed its paperwork in February.
- Cloudera, AppNexus, ForeScout Technologies and Carbon Black, all of which filed paperwork confidentially within the past several weeks.
In many ways, Mulesoft is the kind of rapidly-growing, somewhat predictable, and entirely “ordinary” company investors are looking for this year. So far, mere hours into the trading day, it looks like Mulesoft has been received warmly. This should come as reassurance to investors which, after a relatively sparse 2016, want to get the liquidity pipeline moving again.
Today in the Crunchbase Daily:
- Here comes the first big enterprise software IPO of the year. MuleSoft, provider of a platform for building application networks, priced shares for its IPO at $17 each, above the projected range of $14 to $16. At that price, the San Francisco-based company should have an initial market capitalization of more than $2 billion.
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