Mastercard-backed AvidXchange valued at $4.6 billion in tepid Nasdaq debut

(Reuters) -Business payments firm AvidXchange Inc hit a market capitalization of roughly $4.62 billion on Wednesday in a lukewarm market debut, mirroring investor concerns of growing volatility in the U.S. capital market.

Shares of AvidXchange, which counts Mastercard Inc among its investors, opened at $24.14, down 3.4% from its initial public offering (IPO) price of $25 per share.

A clutch of public market-bound companies have recently pulled the plug on their plans amid adverse market conditions. Peloton rival iFIT postponed its IPO indefinitely, while GIC-backed clinical trial firm WCG withdrew its IPO altogether.

AvidXchange, which makes software that automates payments, invoicing, and accounting for small and mid-sized businesses, had raised $660 million in its upsized IPO on Tuesday by selling 26.4 million shares.

Financial technology firms that facilitate payments for businesses have been highly successful over the past year, as the COVID-19 pandemic accelerated digital transition across industries.

Proceeds from the IPO will be used to invest in product development, sales and marketing and to expand its employee base, AvidXchange co-founder and Chief Executive Officer Mike Praeger told Reuters.

“We may also use a portion of the net proceeds for acquisitions or strategic investments in complementary businesses, products, services or technologies,” he added.

However, Praeger said the company currently does not have any definitive plans for such investments or acquisitions.

AvidXchange, founded in 2000, processed around 58 million transactions in the last 12 months as of second quarter of 2021.

Given that AvidXchange’s product caters to middle market businesses, Praeger believes the current inefficiencies and trends in the segment pose a large and growing opportunity for the company.

It counts more than 7,000 North American companies as its clients and has offices across seven cities in the United States.

Goldman Sachs and J.P.Morgan were the lead underwriters for the offering.

Reporting by Sohini Podder in Bengaluru; Editing by Uttaresh.V and Shailesh Kuber