Unity’s debut win ends IPO spree on high note

SAN FRANCISCO: Unity Software Inc, which makes software to design video games, jumped 31% in its trading debut, capping a week of big successes for newly public companies in the sector.

The San Francisco-based company raised US$1.3bil in an initial public offering (IPO) at US$52 a share that topped a marketed range of US$44 to US$48 that had been elevated earlier. The shares opened trading last Friday at US$75 and closed the day at US$68.95, giving Unity Software a market value of US$18bil.

The offering was the fourth major listing on a US exchange this week by a software maker. Snowflake Inc, which raised US$3.86bil including so-called greenshoe shares in the biggest-ever US software IPO, finished the week with its stock exactly double the offer price.

JFrog Ltd and Sumo Logic Inc also delivered strong debuts, with JFrog climbing 47% after its US$585mil offering including the greenshoe overallotment and Sumo Logic rising 14% for the week after its US$326mil offering.

The four companies were among 24 that went public this week on US exchanges, raising a combined US$11.7bil, according to data compiled by Bloomberg.

Companies that fared well included telemedicine provider American Well Corp and Compass Pathways Ltd, which has patented a synthetic version of the hallucinogen psilocybin to help treat depression. American Well ended the week up 28% from its offer price while Compass climbed 71% in its debut.

Less trendy listings finished on the down side. Broadstone Net Lease Inc, a real estate investment trust, priced its IPO at the bottom of its marketed range to raise US$570mil on Wednesday and fell 1.5% since then.

Packaging and container maker Pactiv Evergreen Inc had one of the worst launches this year on a US exchange. After pricing its shares below its targeted range to raise US$575mil, the company’s stock dropped 22% in its debut on Thursday and is now down 15% from the offer price.

Unity Software chief executive officer John Riccitiello said the company’s listing benefitted from deploying an auction process to sell shares in the IPO.

“We don’t want to make decisions based on hearsay when we can make decisions based on what investors think and why they think it, ” Riccitiello said in an interview.

The company gathered orders by having investors input them onto a computer system instead of through the banks’ sales representatives, according to people familiar with the matter who asked to not be identified because the matter is private.

That allowed Unity Software and its bankers to be better informed on demand at each potential price, a contrast to the typical process in which prospective investors could submit vague orders.

Investors weren’t given price guidance before the price was determined and bankers signed non-disclosure agreements that prohibited them from discussing the order books with clients, the people said. Investors also weren’t allowed to revise their orders after the price was determined, according to the people. — Bloomberg

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