The target of one of the software sector’s largest take-private buyouts in recent memory is now back on the public markets. But in the process, the company and its private equity backers didn’t raise quite as much cash as they’d initially planned.
SolarWinds, a developer of IT management software, returned to the NYSE on Friday, pricing its offering of 25 million shares at $15 apiece to raise $375 million. Earlier this month, the company had submitted a filing with the SEC indicating its intent to sell 42 million shares for between $17 and $19 each, a midpoint pricing of which would have raised $756 million—more than double but what the offering ended up bringing in.
Stock in SolarWinds (NYSE: SWI) initially dipped a further 2% on Friday before closing flat, at $15.03 per share. The offering came amid a volatile week for tech stocks across many international markets. Valtech, another provider of IT services that had been scheduled to debut, ultimately postponed its offering earlier in the week due to market conditions, while electric scooter maker Niu also priced below its expected range.
SolarWinds had been privately held for a little more than two-and-a-half years, ever since Silver Lake and Thoma Bravo teamed up on an acquisition valued at $4.5 billion that was completed in 2016. That year was a high point for take-private buyouts of software companies in the US, with firms executing 10 such deals worth a combined $20.8 billion, according to the PitchBook Platform. Last year, for comparison’s sake, saw eight public-to-private US software deals with a total valuation of just $3.7 billion.
The SolarWinds acquisition is the third-largest take-private deal in the US software space over the past five years, per PitchBook data, trailing only the $6.5 billion takeover of Solera by Vista Equity Partners (also in 2016) and the $5.3 billion purchase of Informatica by Permira and the Canada Pension Plan Investment board (in 2015). Both those companies are still privately owned.
Silver Lake held a 48.3% pre-IPO stake in the SolarWinds, according to an SEC filing, while Thoma Bravo’s interest comprised 39.4%. After the offering, those figures were scheduled to fall to 44.3% and 36.1%, respectively, meaning they’ll combine to retain at least an 80% stake. HarbourVest Partners and AlpInvest Partners both also hold less than 3% of SolarWinds stock.
Related read: Take-private buyouts on pace for decade low in 2018
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