ServiceNow Inc. (NOW:US), the first technology company taken public by Morgan Stanley (MS:US) since Facebook (FB:US) Inc., climbed 37 percent in its debut after raising $210 million, pricing the shares above the planned range.
The shares advanced to $24.60 at the close in New York, after earlier rising as high as $24.75. ServiceNow sold 11.65 million shares at $18 each in its initial public offering, according to a statement yesterday. The company and its founder had offered them at $15 to $17 each.
Morgan Stanley, the No. 1 underwriter of global IPOs, is on track to lead the most initial offerings by Internet and technology companies this year, according to data compiled by Bloomberg. The bank’s work on ServiceNow drew attention following its handling of the initial share sale for Facebook, whose shares sank as much as 32 percent after their debut.
“Morgan Stanley squeezed the lemon dry on the Facebook valuation, and with ServiceNow they didn’t do that,” said Dan Veru, chief investment officer at Palisade Capital Management in Fort Lee, New Jersey. “ServiceNow could be a catalyst here for more deal flow.”
A successful IPO may help buoy demand for other new equities after initial sales worldwide raised 50 percent less in the first half compared with a year ago, Bloomberg data show. The outcome of ServiceNow’s IPO probably will influence plans to go public by other technology companies such as Palo Alto Networks Inc. and Kayak Software Corp., people familiar with the matter have said. Morgan Stanley is also leading those sales.
ServiceNow, led by Chief Executive Officer Frank Slootman, is listing on the New York Stock Exchange under the symbol NOW. Citigroup Inc. and Deutsche Bank AG also were lead managers on the offering.
ServiceNow’s IPO price gave the San Diego-based company a market value of $2.17 billion, or 14 times trailing 12-month sales (NOW:US). That’s more than twice the average valuation sought in the biggest U.S. software-company IPOs since the start of 2011, Bloomberg data show.
ServiceNow’s venture capital owners, which include JMI Equity, Sequoia Capital and Greylock Partners, didn’t plan to sell stock in the IPO. Baltimore-based JMI, which invests in early-stage technology companies, was set to hold almost half the shares in ServiceNow following the offering.
To contact the reporters on this story: Lee Spears in New York at firstname.lastname@example.org Kathleen Chaykowski at email@example.com
To contact the editors responsible for this story: Jeffrey McCracken at firstname.lastname@example.org Tom Giles at tgiles5@ Bloomberg.net