Who goes pub­lic when? Tech firms look to stand out

IPOs planned to avoid get­ting lost in the shuff le

The Buffalo News - - BUSINESS NEWS - By Erin Grif­fith and Michael J. de la Merced

SAN FRAN­CISCO – When Jen­nifer Te­jada, CEO of PagerDuty, de­cided to take the soft­ware com­pany pub­lic, she wanted to avoid this week. The stock mar­ket closes on Good Fri­day, and many peo­ple are on spring break. She had also feared be­ing drowned out by a horde of other tech ini­tial pub­lic of­fer­ings.

“I re­mem­ber say­ing, ‘I hope we don’t get run over by the ‘uni­corn’ stam­pede,’” she said, us­ing the term for pri­vate com­pa­nies val­ued at more than $1 bil­lion.

Pin­ter­est, a dig­i­tal pin board com­pany that is also go­ing pub­lic, wanted to beat Fri­day’s hol­i­day, ac­cord­ing to a per­son fa­mil­iar with the sit­u­a­tion. It wound up sched­ul­ing its IPO for Thurs­day – the same day that Zoom, a video con­fer­enc­ing com­pany, will list its shares.

And Lyft and Uber, the ride­hail­ing com­pa­nies, de­cided to leave breath­ing room be­tween their IPO fil­ings so as not to run into each other, said two peo­ple fa­mil­iar with the de­lib­er­a­tions, who were not au­tho­rized to speak pub­licly. When Lyft filed first, Uber gave it­self a 30-day cush­ion be­fore re­veal­ing its own prospec­tus last week.

The ma­neu­ver­ing is the re­sult of what prom­ises to be a block­buster year for tech pub­lic of­fer­ings. With a glut of prom­i­nent star­tups com­ing to mar­ket all at once, the com­pa­nies, their bankers and the stock ex­changes face a co­nun­drum: Who goes when?

IPOs are gen­er­ally a crown­ing mo­ment that val­i­date years of work. So com­pa­nies ap­proach the day as some­thing more than a fi­nan­cial trans­ac­tion – it is also a com­ing-out party, a brand­ing event and a cel­e­bra­tion. And it is a time when the com­pa­nies do not want to share the spot­light.

“Most of these com­pa­nies have been pri­vate for 10-plus years, and it’s a huge mo­ment,” said Nel­son Griggs, pres­i­dent of the Nas­daq stock ex­change, who over­sees new listings. “Hav­ing their own day is im­por­tant.”

The in­vest­ment banks that man­age IPOs have been work­ing to space out prom­i­nent of­fer­ings by a few weeks so com­pa­nies don’t step on one an­other’s toes, ac­cord­ing to three bankers, who re­quested anonymity to dis­cuss con­fi­den­tial client mat­ters.

The big­gest con­cern has been steer­ing clear of the week that Uber goes pub­lic, they said. Its mar­ket de­but in May is ex­pected to be the largest since 2014, and the com­pany has told some of its in­vestors that its stock sale might value it at up to $100 bil­lion. That would leave lit­tle at­ten­tion for any other com­pany.

Many com­pa­nies that plan to list their shares this year are rac­ing to do so in the first six months, to side­step any po­ten­tial eco­nomic or mar­ket down­turn. In Jan­uary, they had to put their IPO plans on ice for a time be­cause the par­tial govern­ment shut­down af­fected the Se­cu­ri­ties and Ex­change Com­mis­sion, the agency that re­views pub­lic of­fer­ing prospec­tuses.

Yet even if the stock mar­ket and econ­omy re­main strong, ex­cite­ment over IPOs is likely to fade as the year goes on, es­pe­cially with so many listings on the docket.

“There could end up be­ing IPO fa­tigue be­cause it is go­ing to be over­whelm­ing,” said Bar­rett Daniels, a part­ner at Deloitte who fo­cuses on IPO ad­vi­sory work.

If all of the large pri­vate tech com­pa­nies that might be can­di­dates for of­fer­ings went to mar­ket, they could is­sue more than $100 bil­lion in new stock, said Kath­leen Smith, a prin­ci­pal at Re­nais­sance Cap­i­tal, which tracks IPO data. That would sur­pass 2000, the peak of the dot-com era, when com­pa­nies raised $96 bil­lion.

So much new stock could prove dif­fi­cult for the mar­ket to ab­sorb.

“I do think there’s go­ing to be some po­ten­tial in­di­ges­tion,” Smith said.

Daniels of Deloitte said, “We’ve never seen so much money be re­quested in a sin­gle year.” He added, “We’re in un­charted wa­ters.”

Josh King, vice pres­i­dent of com­mu­ni­ca­tions at the New York Stock Ex­change, said it was ca­pa­ble of han­dling mul­ti­ple IPOs and had twice hosted seven on the same day. There is only one fi­nite re­source that the ex­change must man­age for all of the of­fer­ings flood­ing into the mar­ket: the open­ing and clos­ing bell cer­e­monies, when com­pa­nies ring in and close out the day’s trad­ing. Still, plenty of slots are avail­able, he said.

Many com­pa­nies use the bell­ring­ing cer­e­monies as a brand­ing mo­ment. When Lyft went pub­lic in March on the Nas­daq stock ex­change, its top two ex­ec­u­tives, Lo­gan Green and John Zim­mer, rang the open­ing bell from a newly opened sup­port cen­ter for its driv­ers in Los An­ge­les. Pink con­fetti rained down, and the cel­e­bra­tory im­age was in­stantly memo­ri­al­ized. PagerDuty, which is based in San Fran­cisco and makes soft­ware that helps com­pa­nies re­spond to com­plaints and other in­ci­dents, was founded in 2009. It be­came a uni­corn, val­ued at $1.3 bil­lion by pri­vate in­vestors, in 2018. On Thurs­day, it went pub­lic on the New York Stock Ex­change.

PagerDuty did not want to miss the op­por­tu­nity to stand out on its first day of trad­ing, so it brought Pagey, a smil­ing, bug-eyed, neon green card­board-and-felt com­pany mas­cot, to the New York Stock Ex­change’s trad­ing floor. Pagey frol­icked around and photo-bombed CNBC in­ter­views with Te­jada.

Trans­port­ing Pagey across the coun­try from its home in San Fran­cisco was not easy. The bulky mas­cot suit couldn’t be flat-packed into a FedEx box. Te­jada said PagerDuty’s ex­ec­u­tives had con­tem­plated buy­ing Pagey a plane ticket.

“We held our breath a few times when we didn’t know if he-she-they would make it on time,” Te­jada said. (Pagey has no gen­der.) But she was de­ter­mined to get the mas­cot to the trad­ing floor to help show off PagerDuty’s light­hearted com­pany cul­ture. The com­pany even­tu­ally packed Pagey in a cus­tom­ized box and shipped it via courier.

In the end, Te­jada’s con­cerns about be­ing over­shad­owed by other tech of­fer­ings were moot. PagerDuty’s stock soared nearly 60 per­cent on its first day of trad­ing.

The com­pany picked the right date for its list­ing. Min­utes af­ter the mar­ket closed that day, Uber un­veiled its IPO prospec­tus – and at­ten­tion im­me­di­ately shifted

New York Times

Lyft founders John Zim­mer, cen­ter left, and Lo­gan Green, cen­ter right, at the com­pany’s IPO party March 29 in Los An­ge­les. With so many tech firms go­ing pub­lic this year, each is try­ing to get their own mo­ment in the sun.

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