Globoforce IPO downsized; net proceeds and selling shareholders hardest hit.
Globoforce’s IPO is expected soon, as early as this week. However, not is all rosy in Dublin-by-way-of-Massachusetts.
Earlier this week, Globoforce was planning to sell about 4.4 million shares at an offering price between $16 to $18/share. At the mid-point of the range, they would have raised $50 million, or $38.8 million net of expenses. It would have valued the company at about $456.6 million before trading.
The selling shareholders were slated to sell about 1.5 million shares, which would have stuffed $25 million into their pockets, including about $10.3 million to Balderton Capital, who owns over 40% of Gloforce.
In an updated filing this week, the IPO was downsized and the IPO price was reduced. The price range is now $14 to $15/share, which puts a pre-trading value of the company at mid-range of $389.5 million.
In addition, the number of shares being sold in the IPO was reduced by 606,797, all of which were to be sold for Balderton’s account. Not only was the market not quite as receptive to the deal as expected, either there was not quite as much appetite for shares as expected and/or the market did not appreciate Balderton reducing its position.
We believe that it was an offering size issue, and Balderton removed its shares from the offering to make the offering size more palatable. It may have been a tougher sell to reduce the shares being sold for Globoforce, as it would have reduced its offering proceeds considerably more than the reduction in offering price alone. Also, the shares Balderton expected to sell in the offering was a small piece of its holdings and of the overall amount of shares offered.
It seems unlikely that Balderton’s selling was a point of contention with IPO investors, but Balderton’s pulling back was probably a vote of confidence for an offering that seems to have been on the ropes. If this is the case, we applaud Balderton for supporting its portfolio company. There were approximately two dozen other selling shareholders whose portion of offered shares was not reduced, including the CEO and a VP of Global Sales.
In case you’re wondering, Globoforce is a ”leading provider of a cloud-based, social recognition software solution that organizations use to engage their employees worldwide to create alignment with values and advance company goals and culture.”