GoDaddy, one of few recent tech IPOs to have delivered gains for investors, launched a first-time secondary sale that will enable insiders to cash out nearly US$500m of their shares or about 10% of the company.
The offering by the web domain and hosting provider is a compressed marketing effort that will see the 16.5m-share deal price post-close Wednesday after two sessions of marketing and against Monday’s US$32.46 closing price. The shares fell 8.5% to US$29.70 on the news in early trading Tuesday.
Morgan Stanley, JP Morgan and Citigroup lead a 10-firm underwriting syndicate, virtually the same team that took the company public.
Sponsors KKR & Co and Silver Lake and founder Bob Parsons each plan to sell 4m shares, while another backer, Technology Crossover Ventures, is selling 1.9m shares. The other sellers are individual shareholders selling smaller parcels.
The deal will leave KKR, Silver Lake and Parsons holding just under 20% of GoDaddy each assuming exercise of the overallotment option.
GoDaddy flagged a secondary offering as far back as November 25 last year when it registered some of the shares held by its sponsors so that they could sell them in the open market.
GoDaddy went public in late March 2015, raising US$410m from the sale of 23m Class A shares at US$20 each. GoDaddy’s insiders did not sell at the IPO.
The shares touched a high of US$35.35 in early December before diving to US$24.25 at the recent market lows on February 11. Since then the stock has soared, helped by the market’s recovery and the February 17 release of fourth quarter results showing a 30.3% growth in adjusted Ebitda to US$73.5m and 8.7% growth in customer numbers to 13.8m.
The company said currency headwinds would be a challenge this year but it still sees revenue rising to US$1.82bn–$1.85bn this year versus US$1.6bn in 2015.
The stock sale comes amid a barren tech IPO landscape hurt by poor aftermarket performance and the difficulty many tech companies are facing in matching so-called “unicorn” valuations (US$1bn-plus) in less enthusiastic public markets.
However, at least one tech company, Dell subsidiary SecureWorks, is expected to launch a circa-US$200m IPO within the next week in the first real test of demand for new tech issues.
