A series of technology companies, including security software maker Palo Alto Networks, are preparing to go public on the heels of Facebook's $5-billion filing, sensing a window of opportunity as the stock market rallies.
Technology management software maker ServiceNow, human resources software provider Workday, machine data software company Splunk and flash memory maker Violin Memory are also in various stages of planning public offerings this year, sources familiar with the matter said.
These companies are expected to be valued at $1 billion and higher, they said.
Palo Alto Networks, the largest of these firms, is expected to start the process of picking bankers as soon as this week to underwrite its IPO, while ServiceNow has picked Morgan Stanley
Workday has drawn up a shortlist of underwriters, the sources said, but the names of the banks couldn't be learned. Violin is in early talks with banks about a possible filing this year, the sources said.
Splunk filed its registration statement with the U.S. Securities and Exchange Commission, with Morgan Stanley, Credit Suisse
Palo Alto Networks, Workday and Splunk declined to comment. ServiceNow, Violin, Goldman and Morgan Stanley were not immediately available for comment.
Reuters Insider report on tech IPOs http://reut.rs/zgAB3w
The IPO plans come after LinkedIn Corp
Having said that, the S&P 500 <.SPX> is up more than 8 percent so far this year.
For most of these companies, the IPO route is most likely since they have become too expensive to buy out.
It is not like they are a $40 million company going to $70 million. This is a company that is doing several hundred million dollars and growing like 100 percent, one source said, referring to Palo Alto Networks.
ServiceNow is ranked the fifth fastest growing company in North America on Deloitte's 2011 Technology Fast 500, which ranks the 500 fastest growing companies in the technology, media, telecommunications, life sciences and clean technology sectors.
Successful IPOs would be good news for private equity and other investors who have been looking to cash out on their investments but been forced to wait on the sidelines as the markets were roiled.
Throughout 2011, people weren't sure if we were going into another recession or not, double-dipping, and what was happening in Europe, said Brian Fitzgerald, an analyst at UBS. People want to put money to work in fresh growth ideas, especially after sitting on the sidelines and putting it in relatively safer things through 2011.
PREPARING TO GO PUBLIC
In August, Palo Alto Networks hired former Verisign Inc
The company has about $700 million in annual revenue, one of the sources said.
Four venture capital firms -- Globespan Capital Partners, Greylock Partners, JAFCO Ventures and Sequoia Capital -- have invested $65 million in the company.
San Diego, California-based ServiceNow hired former Data Domain CEO Frank Slootman in April last year as its head. Slootman led Data Domain's IPO on the Nasdaq in 2007 and the subsequent $2.4 billion takeover by EMC Corp
Workday was co-founded by David Duffield and Aneel Bhusri who left PeopleSoft after it was acquired by Oracle Corp
Duffield and Bhusri left PeopleSoft to launch the disruptive software-as-a-service for IT management technology in 2006. Workday's product rivals Oracle's and SAP AG's
Workday raised $250 million from venture capital firms and other investors, including Greylock Partners, New Enterprise Associates, T Rowe Price, Morgan Stanley Investment Management, Janus Capital Group Inc
Last year, Violin added a Toshiba Corp <6502.T> subsidiary and Juniper to its list of investors that also includes crossover investment funds, high-net worth industry executives and private equity general partners.
(Reporting By Nadia Damouni; Editing by Paritosh Bansal, Derek Caney, Phil Berlowitz)