NetSuite takes Google IPO route to market

NetSuite has followed the example of Google and begun an auction for its first initial public offering, saying the price will be finalised after the stock market's close on 19 December.

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NetSuite has followed the example of Google and begun an auction for its first initial public offering, saying the price will be finalised after the stock market's close on 19 December.

NetSuite, which sells a range of hosted business software, intends to sell 6.2 million shares of common stock. Last week, the company said it expected the price to end up between US$13 to $16. That would raise a maximum of $99.2 million.

But the auction-style process means the stock's initial price could end up being higher. Scott Sweet, managing director of IPOBoutique.com, said he expects considerable interest from investors in the IPO: "I like the deal. I do believe it will do well."

NetSuite, which targets small and medium-size businesses, is mimicking Google in conducting an online, auction-style IPO, instead of having underwriters set the price.

It has set up a Web site for the IPO at www.netsuiteipo.com. A NetSuite spokeswoman said the company would not comment Monday beyond the news release.

NetSuite had a net loss of $35.7 million in 2006 and in 2007 has so far lost $20.6 million for the nine months ended 30 September. The accumulated deficit stood at $241.6 million as of 30 Sept. 30, NetSuite said.

However, revenue has grown from $17.7 million in 2004 to $67.2 million in 2006. NetSuite took in $76.8 million for the nine-month period ended Sept. 30 and had 5,400 customers as of that date, according to the company.

NetSuite said it plans to use revenue generated by the IPO to pay off an $8m balance on a line of credit with Tako Ventures, an entity controlled by Oracle CEO Larry Ellison, and to possibly make acquisitions.

Ellison controls about 60% of NetSuite's outstanding stock, which works out to about 31.9 million shares. He intends to place those shares into a "lockbox" limited-liability company, a move that would "effectively eliminate" his voting control and thereby avoid potential conflicts of interest, NetSuite said last week.

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