Avaya’s delayed IPO appears to be back on track amid a hot market for public offerings

June 3, 2013
June 3, 2013

The IPO for US telecommunications company Avaya, which first filed for a $1 billion public offering in 2011, seems to be back on track. After delaying its IPO last year, Avaya, which provides routers, virtual networks and telephone systems, recently filed documents with the SEC updating its financial information and other factors related to going public. It’s the latest sign that the IPO market, particularly for technology geared toward corporate customers, is hot.

Avaya’s timing last year was unfortunate; it was close to Facebook’s much-hyped IPO, as well as those for data company Splunk and security software company Palo Alto Networks, both of which had strong debuts. It’s unclear what the appetite for Avaya’s IPO will be but clearly its owners, private equity firms Silver Lake and TPG Capital, have some hope. Although sources say nothing is imminent, Avaya’s CEO Kevin Kennedy has said 2013 is the year for its IPO.

Avaya isn’t in the buzzy big data space and it has lost some market share in its communications business (which includes telephone systems) to Cisco. The company has regrouped a bit to offer new products by boosting its cloud capabilities and is focusing again on middle-sized companies as well as larger firms. Avaya is also looking to take advantage of some of its acquisitions, such as the purchase of Israeli video conferencing company Radvision last year, and it has been cutting costs to clean up its balance sheet. Revenue fell by almost 8% in the first six months of its fiscal year to about $2.4 billion, compared to the same period last year, while its EBITDA fell by about 40% to $169 million.

Counting in Avaya’s favor is the fact that the enterprise technology sector that it’s in has seen strong performance in IPOs, while consumer-oriented companies like Facebook have struggled. Data visualization firm Tableau Software had a strong IPO debut last month, going from a $31 IPO price to a $47 opening share price. Advertising-automation firm Marketo, which went public on the same day, likewise saw its price pop by over 50%. Smart power grid company Silver Spring Networks, which also had its IPO held since 2011, saw its stock jump by almost 30% when it finally went public this year. Overall, US companies in all sectors this year are set to raise the most amount of money (paywall) through public offerings since the financial crisis.

Timing is always a tricky part of IPOs. But given recent market debuts, it seems 2013 may be more hospitable to Avaya than last year.

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