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Palo Alto prices IPO above range
(Reuters) - Security software company Palo Alto Networks (PANW.N) priced its initial public offering on Thursday significantly above its expected range at $42, the company said.
The Santa Clara, California-based firm raised $260.4 million in one of the first major tech IPOs since Facebook Inc (FB.O) went public in May.
The company priced 6.2 million shares as planned. Earlier this week it boosted its range to $38 to $40 from a range of $34 to $37.
The IPO comes after a successful public offering from IT security company ServiceNow Inc (NOW.N) last month which raised $209.7 million. Shares of ServiceNow, which priced at $18, closed Thursday at $24.
Both offerings were led by Morgan Stanley (MS.N), whose reputation as the top bank for tech deals was scrutinized following fallout from Facebook's IPO. Facebook shares, which priced at $38, closed Thursday at $29.
Palo Alto's IPO is the largest offering this week as five companies including online travel company Kayak Software Corp (KYAK.O) and discount retailer Five Below Inc (FIVE.O) look to raise over $700 million in proceeds -- the busiest week since Facebook's debut, according to market data firm Ipreo.
With these deals, the IPO window is beginning to open after a dismal market so far this year.
Global IPO proceeds fell 46 percent to $59.6 billion in the second quarter, according to Thomson Reuters data.
Palo Alto and other deals this week "will set the stage for the current crop of issuers and underwriters who are going to be encouraged to continue to tap this market," said Jonathan Crane, a senior managing director at KeyBanc Capital Markets in their equity capital markets group. "It's a good news story at the moment."
In fiscal year 2011, Palo Alto's revenue more than doubled to $118.6 million. The company's net loss narrowed to $12.5 million from $21.1 million a year earlier.
The company operates in the white hot enterprise software space, selling firewalls to companies that block out malware and viruses. Palo Alto has over 7,750 customers, including Qualcomm Inc (QCOM.O) and Cricket Communications Inc, a subsidiary of Leap Wireless International (LEAP.O).
Palo Alto's listing follows successful IPOs from other enterprise-focused companies like including Guidewire Software Inc (GWRE.N), Jive Software Inc (JIVE.O) and Demandware Inc (DWRE.N), which all saw their shares rise after their debut.
Palo Alto "has all the right ingredients," said Sam Hamadeh, CEO at private company database Privco. "It's in the right sector with companies that have performed well."
Palo Alto Networks is offering 4.7 million shares during the IPO, while existing shareholders are offering 1.5 million. The company's venture backers - Greylock Partners, Sequoia Capital and Globespan Capital Partners - aren't selling shares in the offering.
Besides Morgan Stanley, the IPO is being underwritten by Goldman Sachs & Co, Citigroup, Credit Suisse, Barclays, UBS AG and Raymond James.
Palo Alto will use the proceeds for working capital and other general corporate purposes.
The company intends to list on the New York Stock Exchange under the ticker "PANW." (Reporting By Olivia Oran; editing by M.D. Golan)
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