Shares of Gigamon, a Milpitas-based maker of data traffic management software, jumped more than 45 percent in their market debut, underscoring investor confidence in enterprise software startups.
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 shares gained as much as 46.8 percent by 11 a.m. Pacific time, with the highest price reaching $27.89.
Gigamon’s stellar debut follows that of software maker Textura, 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.Fellow Silicon Valley software firms Model N and Marin gained more than 30 percent in their respective March debuts; Model N remains well above its IPO price, while Marin has drifted lower. San Mateo-based Marketo kept the hot streak going in May, firing more than 77 percent higher in its first trading day and remaining more than 50 percent higher than its IPO price.
Shares of enterprise companies have managed to attract buyers over the past year, while those of consumer Internet companies such as Facebook, Groupon and Zynga 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.
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.
Goldman Sachs, BofA Merrill Lynch and Credit Suisse Securities were lead underwriters to the offering.
Thank you. TiA.