UPDATE 2-NetSuite Inc IPO raises $161 mln, well above range

(Adds analyst comment, detail, byline)

By Lilla Zuill

NEW YORK, Dec 19 (Reuters) - NetSuite Inc, a software company controlled by Oracle (ORCL.O) Chief Executive Larry Ellison, on Wednesday raised $161 million with an initial public offering that priced well above expectations.

About 6.2 million shares sold for $26 apiece, according to an underwriter.

That price was double the low end of an initial forecast range of $13 to $16, and $4 a share higher than the top of the final forecast of $19 to $22 on Wednesday.

Underwriters, led by Credit Suisse and W.R. Hambrecht as co-manager, have the option to purchase an additional 930,000 shares to cover overallotments.

If the "greenshoe" option is exercised, NetSuite will have raised about $185 million. Its market capitalization is about $1.5 billion, based on its IPO price. About 10 percent of the company's outstanding shares are being floated in the public offering.

CELEBRITY CLOUT

NetSuite, which will remain majority-owned by Ellison after the offering, plans to use the proceeds to pay down a line of credit from an Ellison-controlled company, which had a balance of $8 million as of Sept. 30, and for capital expenditures, including a second data center.

Between NetSuite's lofty offering price, and Oracle posting a 35 percent surge in quarterly earnings on Wednesday, it was a good pay day for billionaire Ellison. Oracle shares surged 6.5 percent after it reported earnings.

Ellison, the fourth-richest American based on Forbes 2006 list, invested $100 million in NetSuite in 1998, backing the then fledgling venture of former Oracle executive Evan Goldberg, who is now the company's chief technology officer.

Post-offering, Ellison will either directly or through family trusts own about 55 percent of NetSuite. At $26 a share, his NetSuite stake is worth roughly $852 million.

Ellison, who is also Oracle's largest shareholder, has put his directly owned NetSuite stake into a "lockbox" company, effectively stripping him of voting powers, and thereby reducing concerns that his ownership of two software companies could create a conflict of interest.

"Because Oracle has done well, it adds a little bit of cachet to Netsuite, because Ellison is in both," said Francis Gaskins, president of research firm IPOdesktop.com.

Gaskins added that the high offering price is also a likely indication that investors are bullish on NetSuite's next quarterly results.

NetSuite, which has yet to turn a profit, last month posted a narrower third-quarter loss of $1.8 million versus $9.2 million a year ago, as revenue rose to $28 million from $18 million.