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 investment option.
The Redwood City, California-based company had priced its offering of 6.7 million shares at $15.50 each, raising $103.9 million.
"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 December 31.
JP Morgan and Deutsche Bank acted as joint book-running managers.
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.
(Reporting By Neha Dimri in Bangalore; Editing by Joyjeet Das and Sriraj Kalluvila)