Tenable hires Morgan Stanley to prepare for IPO-sources

(Reuters) - Cybersecurity software maker Tenable Network Security Inc has hired investment bank Morgan Stanley MS.N to lead an initial public offering (IPO) that could come as early as this fall, according to people familiar with the matter.

If it proceeds with an offering, Tenable would be one of the few venture capital-backed cyber security companies to pull off an IPO in recent years. Investors have been wary of many of these companies’ ability to constantly advance their software to stay on top of hackers and attacks.

An IPO could value Tenable between $1.5 billion and $2 billion, the sources said, asking not to be named because the matter is confidential.

Tenable declined to comment, while Morgan Stanley did not respond to a request for comment.

In another example of a rare cyber security IPO, one of Tenable's peers, Zscaler Inc ZS.O, went public earlier this month, and saw its shares jump 75 percent on its first day of trading. It now has a market capitalization of almost $4 billion.

The broader technology IPO market is heating up. File sharing service Dropbox is on track to price its IPO on Thursday in a deal that has been many times oversubscribed and could value the company at more than $7.8 billion.

Tenable, founded in 2002 in Columbia, Maryland, sells software that businesses and governments use to monitor networks for cyber threats including unpatched software vulnerabilities. Its competitors include Rapid7 Inc RPD.O and Qualys Inc QLYS.O.

Tenable, whose customers include Inc, Apple Inc, JP Morgan Chase & Co and the U.S. government, last year saw billings grow more than 40 percent to exceed $250 million, according to a statement in January. Zscaler, by comparison, saw billings climb 62 percent last year to $156 million, according to filings.

Tenable raised $250 million from venture capital investors in 2015, setting a record at the time for the largest fundraising round for a cyber security firm. The company counts venture capital firms Accel Partners and Insight Venture Partners among some its investors.

Reporting by Liana B. Baker and Jim Finkle in New York; Editing by David Gregorio