Bloomberg News

Gilt Groupe, MobileIron Said to Enlist Goldman Sachs for IPOs

February 11, 2014

Gilt Groupe Inc., an e-retailer, and MobileIron Inc., whose software protects smartphones, are working with Goldman Sachs Group Inc. on their initial public offerings, said people with knowledge of the deals.

Gilt’s timing is still being decided, while MobileIron has enlisted other banks including Morgan Stanley, Deutsche Bank AG and Barclays Plc, said people familiar with the companies, who asked not to be identified because the deals haven’t been announced.

The coming IPOs are part of a revival in technology offerings that includes the debut of Facebook Inc., Twitter Inc. and dozens of other Internet and software companies in the past two years. The 14 U.S. companies that raised the most money in offerings since mid-February of 2012 are all trading above their IPO price, a stretch during which the Nasdaq Composite Index has jumped 41 percent.

“When you have companies consistently coming to market and performing well in the after market, more and more companies keep coming,” said Sharon Wienbar, a partner at venture-capital firm Scale Venture Partners in Foster City, California. “There are a number of substantial technology disruptions favoring startups.”

Even with the surging popularity of technology deals, e-commerce IPOs have been rare as Amazon.com Inc. (AMZN:US) expanded its dominance by focusing on growth at the expense of profit. Zulily Inc., which runs a shopping site targeted at moms, was an exception last year. After its share sale, Zulily is now valued at $4.76 billion, making it the third-biggest U.S. e-commerce company by market value, behind Amazon and EBay Inc.

New CEO

Gilt is trying to follow Zulily’s lead after new Chief Executive Officer Michelle Peluso revamped the company. Founded in 2007, Gilt was forced to cut divisions and eliminate jobs as competition emerged for its flash sale model, which involves offering limited-time deals at steep discounts. The company named the former Citigroup Inc. marketing head as chief executive officer last year, replacing co-founder Kevin Ryan.

In an interview in September with Bloomberg Radio, Peluso said that an IPO is “a likely path for us but we’re not in a rush.”

Goldman Sachs is an investor in Gilt and was part of a $138 million financing round in 2011, valuing the company at about $1 billion, that included Japan’s Softbank Corp. and venture investors General Atlantic and Matrix Partners. The company has raised a total of at least $240 million.

Jennifer Miller, a spokeswoman for New York-based Gilt, declined to comment. A spokesman for Goldman Sachs declined to comment.

Devices Galore

MobileIron, also founded in 2007, has raised about $150 million from venture investors including Sequoia Capital, Norwest Venture Partners, Foundation Capital and Institutional Venture Partners.

Demand for software that manages data on a variety of mobile devices is growing as employees bring smartphones and tablets from Apple Inc. to Google Inc. into the workplace, instead of relying on company-issued devices made by BlackBerry Ltd. MobileIron’s biggest competitor, AirWatch LLC, agreed to be acquired last month by VMware Inc. for $1.54 billion.

Sales of mobile-device management, or MDM, software could reach $1.6 billion this year, compared with $784 million in 2012, according to forecasts by researcher Gartner Inc.

“We don’t have anything to share at this time,” Clarissa Horowitz, senior director of communications at Mountain View, California-based MobileIron, said by e-mail about plans for an IPO. Spokesmen for Goldman Sachs, Morgan Stanley, Deutsche Bank and Barclays declined to comment on the MobileIron IPO.

Rising Revenue

In 2012, Gilt generated $550 million in revenue, excluding businesses it discontinued, up from $450 million the prior year. The company was expected to generate cash from operations by the end of last year, Peluso said in September.

The U.S. e-commerce market is expected to climb 15 percent this year to $300.6 billion, according to researcher EMarketer Inc. Revenue at Seattle-based Amazon is projected to rise 21 percent to $90 billion, according to data (AMZN:US) compiled by Bloomberg.

Gilt’s current deals include a pair of Elizabeth & James womens’ sandals for $129, down from $198, and a $449 Hickey mens’ pinstripe sports coat, down from $895.

Some Gilt rivals have moved away from flash sales and others are stumbling. Fab.com Inc. stopped its flash technique last year, opting instead to let customers track departments and products they like, and has cut jobs. Rue La La and Lot18 laid off employees and scaled back. Totsy, a flash site aimed at moms, liquidated its assets last year.

French Contrast

Ventee-Privee.com, a French e-retailer that competes with Gilt, plans to more than quadruple revenue in the next decade by extending the flash model, founder Jacques-Antoine Granjon said this month.

Gilt’s offering could boost the New York startup scene, which has lacked marquee technology offerings. Video-ad provider Tremor Video Inc. (TRMR:US) has lost more than half its value since going public last year, while startups Fab, Foursquare Labs Inc. and Etsy Inc. have struggled as private companies. Photo and video marketplace Shutterstock Inc. has been the outlier, more than quadrupling since its 2012 IPO.

To contact the reporters on this story: Ari Levy in San Francisco at alevy5@bloomberg.net; Leslie Picker in New York at lpicker2@bloomberg.net

To contact the editor responsible for this story: Pui-Wing Tam at ptam13@bloomberg.net


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