3PAR Goes Public

Long-anticipated IPO is expected to garner $95M

November 17, 2007

4 Min Read
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In a long-anticipated IPO move, 3PAR began trading on the NYSE today under the symbol 'PAR.'

The eight-year-old company, which helped popularize the concept of thin provisioning, anticipates net proceeds of $95 million in an offer of 7.5 million shares at $14 per share. If all goes as planned, the IPO will come close to 3PAR's initial goal of raising $100 million, as stated in August 2007.

3PAR backed down from that $100 million figure earlier this month, but management apparently had confidence enough to go ahead and raise share pricing on the eve of the offer.

In early trading today, 3PAR shares were selling at $16.40.

At least one financial analyst thinks 3PAR's doing well, considering the recent activity among comparable startups: Compellent's October IPO was followed by volatile down-trending stock activity, and the long-awaited public debut of EqualLogic was thwarted by Dell's $1.4 billion bid for purchase early this month."I feel [3PAR] priced it fairly. Considering EqualLogic was just acquired by Dell, the three fastest growing storage companies in that arena are now spoken for," states Scott Sweet, senior managing partner of analyst firm IPOBoutique. "I also think that the opening on 3PAR was quite orderly and the deal was well placed. This was compared to the big gap up in Compellent -- only to see it come down significantly in the days following."

3PAR goes public during a time when other storage-related startups have had mixed results on Wall Street, evidenced in the sampling below:

  • Compellent, which like 3PAR specializes in block-level storage and management, faces a range of challenges. After raising $144 million in its IPO, Compellent is still not profitable, though its latest earnings report shows sizeable revenue growth and reduced net losses. Shares were trading at $13.70 at press time.

    Data Domain, which sells data de-duplication software, isn't profitable yet, despite a $109 million IPO in early July 2007. Shares were trading at over $26 at press time, however, and management boasts positive signs of growth.

    Double-Take Software, a de-duplication supplier that went public the same day as Isilon, recently completed a secondary public offering for about $1 million. While the share price has been volatile, at press time shares were trading at $21.70 and the company is profitable.Isilon, a clustered NAS vendor, has been forced to make distressing changes that include a CEO swap-out and earnings statement delays, following a 6 percent to 8 percent dip in sequential revenue and ongoing net losses. Isilon shares, which debuted at $25 per share on December 15, 2006, are currently trading at $5.36.

    Mellanox, an InfiniBand supplier, raised $102 million in

    its IPO last February. Shares have been trending up recently and were selling for $20 at press time.

    VMware, which makes server virtualization software, is by far the most successful storage IPO in recent memory. After a stunnning launch in August, which garnered about $1.7 billion, the EMC-owned firm is profitable and continues to be a Wall Street winner, with shares trading at over $85 at press time.

3PAR will also face challenges, including competitor EqualLogic's acquisition by a deep-pocketed parent. So far, though, 3PAR has had consistent success that indicates it could meet any problems at least head on. Since March 2002, it claims to have shipped 400 systems to more than 200 end customers, including Dow Jones, MySpace, Priceline, and Verizon Business.

3PAR's IPO lead underwriters are Goldman Sachs and Credit Suisse. They have a 30-day option to purchase up to 1.125 million shares at the IPO price less an underwriting discount. Goldman, Sachs & Co. and Credit Suisse Securities (USA) LLC acted as joint book-running managers with UBS Investment Bank acting as co-lead manager. Thomas Weisel Partners LLC and RBC Capital Markets acted as IPO co-managers.Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.

  • Compellent Technologies Inc.

  • Credit Suisse

  • Data Domain Inc. (Nasdaq: DDUP)

  • Dell Inc. (Nasdaq: DELL)

  • Double-Take Software Inc. (Nasdaq: DBTK)

  • EMC Corp. (NYSE: EMC)

  • EqualLogic Inc.

  • Goldman Sachs & Co.

  • Isilon Systems Inc. (Nasdaq: ISLN)

  • Mellanox Technologies Ltd. (Nasdaq: MLNX)

  • RBC Capital Markets

  • Thomas Weisel Partners

  • 3PAR Inc.

  • UBS Investment Bank

  • VMware Inc.

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