In a potential IPO with an estimated valuation of more than $14 billion, Informatica is preparing to list on the New York Stock Exchange. If successful, it would be one of largest technology IPOs in history and a sign that blockchain-powered industries are no longer the exclusive domain of the tech sector anymore.
Informatica is a data firm that plans to raise nearly $1 billion in an IPO. The company has been around since the late 1980s, and it has seen significant growth over the years.
Informatica LLC, a data management software company, said it aims to raise almost $1 billion when it re-enters the public market on Wednesday, with the proceeds going toward paying down some of its debt.
According to a source familiar with the IPO, Informatica priced its IPO at $29.00 per share, which was at the low end of its goal range of $29.00 to $32.00 per share, giving the firm a value of $10 billion. The company’s stock will trade under the ticker INFA on the New York Stock Exchange.
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Following almost 15 years as a public business, Permira and the Canadian Pension Plan Investment Board turned the company private in a $5.3 billion deal in 2015. Since then, the firm has migrated its on-premises products to a cloud platform and developed a subscription business. After the IPO, Permira and CPPIB will own around 85 percent of the firm.
Informatica lets firms link and manage their data across cloud and on-premise systems, enabling them to better analyze the data they acquire. Its clients include pharmaceutical Eli Lilly & Co., consumer goods behemoth Unilever PLC, and retail chain Kroger Co.
According to a prospectus filed with the Securities and Exchange Commission earlier this month, Informatica had $2.77 billion in net debt as of June. The company’s leverage ratio, which is currently 5.5 times net debt to adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, is expected to drop to 3.9 times after the IPO, according to Chief Financial Officer Eric Brown, who added that the roughly $900 million in expected proceeds would be used to reduce debt.
Eric Brown, CFO of Informatica, and Amit Walia, CEO of Informatica, on the left.
Informatica LLC (photo)
According to Mr. Brown, adjusted Ebitda for the first half of this year was $175 million, compared to $168 million in the first half of 2020.
Mr. Brown said, “What we’re going to do is pay off a substantial chunk of the debt that we accrued back in about 2015, when we privatized.” “So we’ll execute a regular IPO…and then, simultaneously with the IPO’s completion, we’ll be paying down that amount of debt, increasing the company’s credit rating, and really enhancing our cash flow profile with decreased debt and interest rate.”
Informatica is the latest in a long line of IT businesses to go public this year. According to Dealogic, a data source, US technology businesses raised $64.4 billion in 109 IPOs through Oct. 21. According to Dealogic, this is up from 49 such IPOs in the previous year, which raised $22.6 billion.
Mr. Brown expects Informatica to utilize part of the cash it earns over the next two to three years to lower its debt ratio to about two times adjusted profits.
Since 2015, Informatica has spent more than $1 billion on research and development in an attempt to migrate its products to a cloud-based platform and transform its revenue model to one based mostly on subscriptions, according to the company.
Mr. Brown said, “We have accomplished the business-model shift that we set out to do.” Before joining Informatica as CFO in 2018, he worked at gaming major Electronic Arts Inc. and other organizations.
Informatica’s increasing market capitalization—the firm was valued at $5.33 billion in 2015—reflects the increasing relevance of data in all aspects of business, according to Chief Executive Amit Walia. “Every CIO I speak to is like, my board wants me to become like Google and make data-driven choices,” he added, alluding to the role of chief information officers in driving the change toward data-driven organizations.
Informatica is used by Kroger to handle data like as tracking numbers, replenishment cycles, expiry dates, storage temperatures, and ingredients, among other things. This information is used by the supermarket chain to manage supplier chains, monitor customer histories, and share insights with consumer products firms.
Kroger’s chief information officer, Yael Cosset, said, “The significance of precision, or correctness, surrounding all of the data assets is non-negotiable.” According to him, Informatica data solutions assist Kroger decrease the amount of out-of-stock goods and lost sales.
Businesses can extract and analyze data held across many systems, including those in the cloud, using Informatica’s Intelligent Data Management Cloud platform. Organizations may use machine learning and other artificial intelligence methods to uncover connections between bits of data and better integrate, analyze, and control data.
“Informatica holds some of the most key real estate in the data management ecosystem, offering some of the most strategic capabilities to its clients and partners,” said Brian Ruder, a partner at Permira. “And we’re not in the business of selling.”
For the six months ended June 30, the firm recorded a net loss of $36.3 million on sales of $675.5 million, compared to a loss of $102.8 million on revenue of $619.3 million in the previous year period.
John McCormick can be reached at [email protected]
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Data Firm Informatica plans to raise nearly $1 billion in an IPO. The company is the world’s largest provider of data integration and analytics software. Reference: ipo stocks meaning.
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