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 San Francisco-based Square, run by Twitter Inc Chief Executive Jack
Dorsey, is one of the most prominent "unicorns," or private
companies valued at $1 billion or more, to plan a public debut this
year.
This month it sent chills through the technology industry when it
set the price range for its IPO at $11 to $13 a share, valuing
Square at up to $4.2 billion, or 30 percent less than in a private
fundraising round a year ago.
Other high-profile companies considered possible candidates for IPOs
in the coming year include accommodations service Airbnb and online
storage company Dropbox.
One-third of U.S.-based tech companies that went public this year
priced their shares below their private value, according to data
from market intelligence company Ipreo and data provider Pitchbook
and analyzed by Reuters.
The valuation discount for Square, which will debut Thursday on the
New York Stock Exchange, is among the steepest since the start of
2014, although it is below discounts of 40 percent for big-data
company Hortonworks Inc and 32 percent for storage company Box Inc.
Founded in 2009, the company started as a way for small businesses
to accept credit card payments through mobile devices. It now offers
services ranging from loans to invoice software.
The company plans to sell 25.7 million Class A common shares, while
a charity created by Dorsey is set to sell about 1.35 million.
"At this level, there will be appetite to invest," said Brendan
Connaughton, chief investment officer at ClearPath Capital Partners,
which has a client relationship with Square.
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Investors attributed the discounted pricing in part to Dorsey's role
at Twitter as well as steeper competition in payments from Apple and
Amazon.
Square reported mounting losses for the first nine months of the
year, compared with the same period in 2014, and slowing revenue
growth.
Square this week touched on Dorsey's dual CEO roles in an updated
IPO filing that states Dorsey will give his "full business efforts
and time to the company, other than with respect to (his) work with
Twitter Inc."
Goldman Sachs & Co, Morgan Stanley & Co LLC and J.P. Morgan
Securities LLC are among 10 firms underwriting the offering.
(Reporting by Heather Somerville; Writing by Stephen R. Trousdale;
Editing by Edwina Gibbs)
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