Data management software company Informatica LLC said it plans to raise nearly $ 1 billion when it returns to the public market on Wednesday and plans to use the amount to pay off some of its debt.
Informatica, based in Redwood City, Calif., Priced its initial public offering at $ 29 per share, at the low end of its target range of $ 29 to $ 32.00 per share, giving the company a valuation of 10 billion dollars, according to someone familiar with the IPO. . The company’s shares will be listed on the New York Stock Exchange under the symbol INFA.
Private equity firm Permira and the Canada Pension Plan Investment Board in 2015 privatized the company in a deal valued at $ 5.3 billion after about 15 years as a public company . The company has since moved its on-premises products to a cloud-based platform and established a subscription business. Permira and CPPIB will control around 85% of the company after its IPO.
Informatica, which lists drug maker Eli Lilly & Co., consumer goods giant Unilever PLC, and supermarket chain Kroger Co.
among its clients, helps businesses connect and manage their data in the cloud and on-premises systems, enabling organizations to better analyze the data they collect.
The company reported net debt of $ 2.77 billion in June, according to a prospectus filed by Informatica with the Securities and Exchange Commission earlier this month. Its leverage ratio – currently 5.5 times net debt to adjusted earnings before interest, taxes, depreciation and amortization, or EBITDA – is expected to decline to 3.9 times after the IPO, CFO Eric said. Brown, adding that the company would use the roughly $ 900 million in expected revenue to reduce its debt.
Adjusted EBITDA for the first six months of this year was $ 175 million, up from $ 168 million in the first six months of 2020, Mr Brown said.
“What we’re going to do is pay off a lot of the debt that we took on around 2015, at the time of privatization,” Brown said. “So what we’re going to do is a traditional IPO … then, along with the IPO closing, we’ll pay off that amount of debt, improve the company’s credit rating, and will actually improve our cash flow profile with reduced debt and interest rates.
Informatica is joining a host of tech industry companies to go public this year. U.S. tech companies raised $ 64.4 billion in 109 IPOs through Oct. 21, according to Dealogic, a data provider. This is an increase from 49 such IPOs in the period a year earlier, which raised $ 22.6 billion, Dealogic said.
Informatica plans to use some of the cash it generates to reduce its debt-to-equity ratio to about twice adjusted earnings over the next two to three years, according to Brown.
Informatica said it has invested more than $ 1 billion in research and development since 2015 with the goal of moving its products to a cloud-based platform and evolving its business model to a largely based one. on subscriptions.
“We have completed the transformation of the business model we have set for ourselves,” said Mr. Brown. He has held roles at video game giant Electronic Arts Inc.
and other companies before joining Informatica as CFO in 2018.
Informatica’s growing valuation – the company was valued at $ 5.33 billion in 2015 – reflects the growing importance of data to all aspects of the business, said chief executive Amit Walia. “Every CIO I talk to is, for example, that my board wants me to become like a Google and make data-driven decisions,” he said, referring to the role that plays CIOs in the transition to data-driven businesses.
Kroger, for example, uses Informatica to manage data such as tracking numbers, replenishment cycles, expiration dates, storage temperatures, ingredients, and more. The supermarket chain uses this data to manage its supply chains, track customer history, and share information with consumer goods companies.
“The importance of precision, or accuracy, around any data asset is non-negotiable,” said Yael Cosset, chief information officer of Kroger. Informatica data systems help Kroger reduce the number of out-of-stock items and minimize lost sales, he said.
Informatica’s Intelligent Data Management Cloud Platform enables organizations to extract and analyze their data stored on multiple systems, including those in the cloud. Machine learning and other artificial intelligence techniques help organizations discover the relationships between pieces of information and better integrate, analyze and govern data.
“Informatica occupies some of the most strategic real estate, providing some of the most strategic functionality to its customers and partners, in the data management ecosystem,” said Brian Ruder, partner at Permira. “And we are not salespeople.”
The company reported a net loss of $ 36.3 million on revenue of $ 675.5 million for the six-month period ended June 30, compared with a loss of $ 102.8 million on revenue of $ 619.3 million. of dollars during the period of the previous year.
Write to John McCormick at [email protected]
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