Monday , January 27, 2020

Eye on IPOs: Investors Embrace Bill.com; Is Klarna Next?

The term “exceeding expectations” has long been a cliché in corporate America, but it certainly applies to this week’s initial public offering of stock from invoice-management and business-to-business payments provider Bill.com Holdings Inc. Now Sweden-based installment-payments provider Klarna AB, reported to be the most valuable financial-technology provider in Europe and which has major U.S. operations, reportedly is considering an IPO.

Palo Alto, Calif.-based Bill.com earlier had expected to get $16 to $18 per share, but upped that goal to $19 to $21 shortly before its IPO in hopes of raising $159 million after underwriting expenses. But with underwriters sensing strong investor demand, the company priced its IPO of 9.82 million shares late Wednesday at $22 per share.

Then, on Thursday morning, trading in Bill.com’s new stock opened at $37.25 on the New York Stock Exchange, 69% above the IPO price. Trading settled down by the closing, ending the day at $35.50. The stock opened at $36 Friday morning.

Photo by Rick Tap on Unsplash

Net proceeds from the IPO range from $195.8 million up to $226 million if underwriters exercise their options to buy more shares at $22.

Founded in 2006, Bill.com isn’t yet profitable, but it has 81,000 small-business clients and its revenues rose 67% in fiscal 2019 to $108.4 million. Bill.com’s cloud-based software for small and mid-size businesses is integrated with Intuit Inc.’s QuickBooks accounting program, and company partners include JPMorgan Chase & Co., Bank of America Corp., American Express Co., and 70 of the top 100 accounting firms.

“Small businesses have been stuck using legacy manual payment processes, and Bill.com offers a unique solution,” David Albertazzi, research director at Boston-based Aite Group LLC, tells Digital Transactions News by email. “While the percentage of checks used by consumers has decreased significantly over the last few years, this has not been the case for small businesses (SMBs) who still routinely use checks to pay bills, pay employees, or pay other businesses. Bill.com help these businesses to automate their payment processes and reduce costs.”

Meanwhile, Sebastian Siemiatkowski, the chief executive of Klarna, which has U.S. headquarters in Columbus, Ohio, told TechCrunch that “maybe it could happen” when asked about an IPO. If it does, the IPO would take place in the United States, he said.

Klarna, which serves 190,000 merchants, is one of the world’s most valuable “unicorns”—a privately held company valued at $1 billion or more. Klarna in August pegged its valuation at $5.5 billion following a $460 million funding round, CNBC reported. Visa Inc. invested in Klarna in 2017.

Another payments company considering an IPO is merchant processor Shift4 Payments Inc., which filed a draft registration statement early this month but hasn’t yet released further details publicly.

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