ForeScout Technologies, the Internet of Things security company, priced its security IPO at $22, the top of its proposed range. It also enlarged the size of the IPO to 5.3 million shares, meaning the company raised about $116 million in the offering.
ForeScout helps businesses and government agencies monitor the devices connected to their networks. It also alerts them of potential intrusions.
Here’s how ForeScout describes itself in the S-1 filing. “We have pioneered an agentless approach to network security to protect organizations against the emerging threats that exploit the billions of devices connected to organizations’ networks. The traditional approach of relying on a corporate-installed software agent to secure a device has significant limitations in today’s world as devices are developed using a wide variety of platforms and operating systems that cannot support agents.”
ForeScout had $167 million in revenue last year, compared to $126 million for 2015. Losses grew to $75 million in last year, up from $27 million in 2015.
Amadeus Capital had the largest ownership stake at 19.6 percent, prior to the IPO. Accel had 15.2 percent, Pitango had 14 percent and Meritech Capital Partners had 13.4 percent. The company raised at least $125 million, dating back to 2000.
As of last year, ForeScout was said to possess a $1 billion valuation. The IPO values ForeScout at just above $800 million.
This is what’s become known as a “down round IPO.” Some investors had built-in protections and it looks like Wellington will be granted additional shares to make up for an IPO priced at a lower price than where it invested.
“While earlier investors like Accel, Amadeus, and Meritech will be big winners upon IPO, Wellington won’t make a killing,” said Atish Davda, CEO at EquityZen. Davda is a shareholder through secondary transactions. He also called ForeScout a “dinosaur” for going public at 17 years old.
Early this year, we broke the news that ForeScout had filed confidentially. The company had taken advantage of a JOBS Act provision that allows businesses to submit filing updates without added scrutiny in the months leading up to an IPO.
The company is listing on the Nasdaq, under the ticker “FSCT.” Morgan Stanley and J.P. Morgan have managed the Wilson Sonsini and Goodwin Procter were the legal teams on the IPO.
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