Shares of Gigamon Inc, a maker of data traffic management software, jumped as much as 37 percent in their market debut, underscoring investor confidence in enterprise software start-ups.
The company, valued at about $680 million at the opening price, raised about $85.5 million after pricing the offering of 6.75 million shares at $19 each, the midpoint of the expected range.
Gigamon sold 4.5 million shares in the offering, while shareholders sold the rest.
Gigamon's stellar debut follows that of software maker Textura Corp, which rose as much as 68 percent on its first trading day last Friday. Textura shares are trading about 40 percent above their IPO price of $15.
Shares of enterprise companies have managed to attract buyers over the past year, while those of consumer internet companies such as Facebook Inc, Groupon Inc and Zynga Inc have struggled to stoke investor sentiment.
Shares of enterprise companies, which sell services to businesses rather than individuals, have risen 37 percent on average in the two years following their IPOs, compared with 13 percent for consumer companies, according to market data firm Ipreo.
The company that designs and builds data traffic visibility products in the United States is backed by global venture capital firm Highland Capital Partners.
The venture capital firm, which sold 495,000 shares in the offering, will remain the biggest shareholder in the company with 25.8 percent stake.
Milpitas, California-based Gigamon, which counts 60 Fortune 100 companies among its end-user customers, earned $7.5 million on revenue of $96.7 million in 2012. The company has generated positive cash flows in each of the last seven years, according to its filing with the U.S. Securities & Exchange Commission. (link.reuters.com/tar78t)
Goldman Sachs, BofA Merrill Lynch and Credit Suisse Securities (USA) LLC were lead underwriters to the offering.
Gigamon shares were up 37 percent at $26.10 in early trading on Wednesday, making it the second biggest gainer on the New York Stock Exchange.
(Reporting by Ashutosh Pandey in Bangalore; Editing by Saumyadeb Chakrabarty)