Palo Alto Networks boosts price ahead of IPO

Maximum price rises to $40 from $37; raising $20 million more capital

Financial trends and news by Steven Loeb
July 17, 2012
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Despite all evidence to the contrary, now seems to be a pretty good time to be a tech company heading toward an IPO. Many may have been scared off, but those brave enough to weather the storm may reap all of the benefits.

One such company is turning out to be Palo Alto Networks. The software security company, which is expected to go public on Friday, filed with the Securities and Exchange Commission to boost the price range of its IPO on Tuesday.

The initial price of the stock was expected to be somewhere between $34 and $37, according to a July 9 SEC filing, but it has now been updated to price between $38 and $40.

The number of shares has not been altered, with 6,200,000 being offered.

“Palo Alto Networks, Inc. is offering 4,687,259 shares of its common stock and the selling stockholders are offering 1,512,741 shares,” both filings state.

Upping the price of IPO also raises the total amount that Palo Alto Networks can raise by 8%, from $229 million to $248 million.

The stock will be listed on the New York Stock Exchange with the symbol “PANW.”

Kayak Software, Five Below Inc. and Fender Musical Instruments are all expected to go public on the same day as Palo Alto Networks.

Palto Alto Networks was founded in 2005, and has raised over $45 million, including an $18 million round B in June 2007 from Globespan Capital Partners, Greylock Partners and Sequoia Capital, as well as a $27 million round C from  Lehman Brothers Venture Partners and existing investors.

Investing in tech

A report from CB Insights on Tuesday found that in the second quarter of 2012, over $8 billion was put into 812 companies by venture capitalists, with Internet deals increasing 14% from the previous quarter.

Internet-based technology was the largest sector attracting funding.

Along with funding, mergers and acquisitions are also up, according to a report from Dow Jones VentureSource earlier this month.

In the second quarter, there were 110 acquisitions of venture-backed companies in the United States. While the overall number of deals were down 6% from the same quarter in 2011, it is still up from 98 in the first quarter of 2012.

While funding and acquisitions are up, IPOs are having a rough year so far. The same Dow Jones report found that there were only 11 venture-backed companies in the United States go public, down from 20 the previous quarter.

Tech IPOs may now be back in fashion, though, after ServiceNow debuted 37% above its IPO price of $18. The stock ended Tuesday at $24.27.

Palo Alto Networks was not available for comment

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