* Market value touches half-a-billion dollars
* Shares priced at $15.50
By Neha Dimri
March 20 Model N Inc shares surged 44
percent in their trading debut on Wednesday, fetching a market
value of nearly half-a-billion dollars, as the business software
maker's hold on the pharmaceutical market makes it an attractive
The Redwood City, California-based company had priced its
offering of 6.7 million shares at $15.50 each, raising $103.9
"They're very unique ... They've carved out pretty much an
impenetrable market position in the life sciences area and
they're taking that success pattern into other vertical markets
such as technology," said Francis Gaskins, a partner at
IPODesktop.com, an IPO research company.
Model N provides revenue management software to life science
and technology companies that helps manage pricing, deals,
contracts and rebates.
The company, which filed for an IPO in February, counts
Johnson & Johnson, Boston Scientific Corp, Dell
Inc and VMware Inc as its customers.
"They are moving more into cloud, which is always of great
interest to investors, because that's based more on subscription
revenue with additional recurring earnings," Gaskins said.
Shares of cloud companies such as Workday Inc,
ServiceNow Inc, Guidewire Software Inc and
Demandware Inc are trading well above their IPO prices.
Guideware shares have gained 183 percent, Workday shares 115
percent, ServiceNow 91 percent and Demandware 58 percent since
their listing in 2012.
The market for business software is expected to reach $300
billion globally by the end of this year, according to market
research firm Gartner.
"The timing of this (IPO) was to make a statement about the
market for revenue management and about the maturity of the
company," Chief Executive Zack Rinat told Reuters.
Rinat, a Silicon Valley entrepreneur, also co-founded
application software company NetDynamics, which was acquired by
Sun Microsystems Inc in 1998.
Model N, which was founded in 1999, is backed by Accel-KKR
Co LLC, a partnership between private equity firm KKR & Co LP
and venture capitalist firm Accel Partners.
The company plans to use the proceeds to invest in research
and development. It reported a net loss of $1.3 million for the
three months ended Dec. 31.
JP Morgan and Deutsche Bank acted as joint book-running
Shares of Model N were up 4 percent at $21.15 on the New
York Stock Exchange by afternoon after touching a high of $22.25
at open. About 4.1 million shares changed hands by 1229 ET.