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Pexip, which rivals video conferencing software such as Zoom and
BlueJeans and says it is used by the U.S. military and the
German government, may blaze a trail for others, bankers said.
A combination of turbulent markets due to the economic impact of
the coronavirus pandemic and the logistical hurdles of
conducting a deal remotely during lockdowns in most of the world
has deterred companies from launching IPOs.
But in a rare example of a firm going ahead with a listing
during the crisis, Pexip intends to sell 17 million new shares
at 63 Norwegian crowns ($6.06) each. Existing shareholders plan
to sell another 17 million shares at the same price, taking the
total to be raised in the IPO to 2.142 billion crowns.
IPOs usually involve analysts, bankers and company executives
jet-setting around the world for presentations at high-end
hotels and face-to-face meetings with investors.
"We initially had some pushback about completing the deal on
video, but this lockdown period is a big change for society as a
whole and we believe for the finance industry and for IPOs it is
a super efficient way of doing interactive meetings," Pexip
Chief Executive Odd Sverre Ostlie told Reuters on Friday.
Ostlie admitted, however, that the market volatility had scared
him a bit, but "massive interest" since Pexip first announced
its intention to list last week helped soothe nerves.
As the working world has rushed to video-conferencing systems
since the crisis erupted, their security systems have come under
scrutiny.
Pexip markets itself as being more secure than rivals by
allowing users to store the data on a "self host" basis on their
own private cloud or data centre.
Funds advised by Capital Research and Management Company,
Wasatch Global Investors, DNB Asset Management and TIN Fonder
have committed to subscribe to 1 billion crowns of shares in the
IPO.
"We did the very first early look meetings back in January and
February live, then we switched to all video meetings," said
Peter Straume, managing partner and chief executive of ABG
Sundal Collier Norway, one of the joint global coordinators
along with Carnegie and Pareto Securities.
"The company has for example never met the two U.S. based
cornerstone investors face-to-face, all interaction with them
have been done by video," he added.
OTHER POTENTIALS
Market participants are keeping a close eye on proceedings and
trying to glean what the deal might mean for other potential
issuers. With IPOs drying up, equity capital markets (ECM)
bankers are focusing on running secondary trades for companies
looking to raise funds to get through a global recession.
But bankers say that a small pipeline of deals is building in
Europe, especially in the Nordic region. In the United States,
pharma companies Zentalis Pharmaceuticals and Keros Therapeutics
completed IPOs last month.
"I suspect that in most IPOs when investors need to make
substantial investments they will still want to meet management
- but that can change," said a London-based banker who heads
equity capital markets for a bulge bracket bank. He said he
would be keeping a close eye on the Pexip trade.
Roadshows for Pexip will run from May 5 to May 12, though timing
may be extended up until May 19 if necessary, the company said
in a statement to the Norwegian bourse.
(Reporting by Abhinav Ramnarayan; Editing by Alexander Smith and
David Evans)
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