The tech IPO window could be opening — here's what to expect in September

Window house Alice

The tech IPO market is primed for a resurgence in September — after a historically sluggish start to the year.

At least three tech startups that have filed for initial public offerings confidentially could make their intentions public as early as the week of August 22, according to people familiar with the matter.

Those include the software-as-a-service company Apptio, the cybersecurity-software company Carbon Black, and the software company Coupa.

Apptio, which is based in Bellevue, Washington, and develops business management applications, was reportedly planning for an IPO more than a year ago but has yet to make a filing public. It hired Goldman Sachs, JPMorgan, and Bank of America Merrill Lynch last July, according to The Wall Street Journal.

Carbon Black, formerly known as Bit9, is based in Waltham, Massachusetts, and develops endpoint security software. The startup, which is backed by Sequoia Capital and Blackstone, hired Morgan Stanley and JPMorgan to lead an IPO, Bloomberg reported in June.

Coupa is a cloud-based software company based in San Mateo, California, that helps companies manage their finances. Reuters in July reported that it had hired Morgan Stanley, JPMorgan, Barclays, and Royal Bank of Canada for an IPO.

All three are likely contenders for the post-Labor Day window — a natural time for dealmaking to pick up after a late summer slump — although that's not a guarantee they'll hit the road then. Even thought the Nasdaq Composite index is at a record, any turbulence in the market could discourage issuers.

At the moment, though, IPO investors are indicated they'll be receptive to new listings, one of the people said, in part because of the scarcity of such deals this year. Mutual funds that invest in IPOs, for example, are looking for opportunities to bolster their returns before the end of the year.

And although there have only been six tech IPOs this year, those that did approach the market performed well.

Line IPO NYSE

The cloud-communications company Twilio, for example, priced above range in June and continued to soar for days. The Japanese messaging app Line priced above its range in July, jumped 27% on its first day of trading, and continues to hover.

Strong tech IPO performance has also piqued the interest of momentum investors, or hedge funds that might be looking to play IPOs as an asset class by betting on the kinds of short-term gains that Twilio and Line posted.

In short, bankers are advising companies that are in a position to launch to consider doing so, the person said.

Other deals that could go in the fall include the enterprise-storage company Nutanix, which has been on file publicly since late 2015, and the application-intelligence software company AppDynamics, which has not yet filed publicly but is a likely contender for the fourth quarter, the people said.

Most tech IPOs that are likely to go this year — including Apptio, Carbon Black, and Coupa — have revenues under $1 billion, allowing them to file confidentially with the Securities and Exchange Commission under the Jumpstart Our Business Startups, or JOBS, Act.

Companies that file confidentially must make their documents public 15 business days before holding a roadshow — which is why any tech startups looking to launch right after Labor Day could file publicly by the week of August 22.

Of course, not every company that files will necessarily end up launching its deal. Recently, a number of startups planning to go public have ended up being bought instead. Those include the security-software company Blue Coat Systems and the Canadian auto marketplace Trader.

And a failed deal from a company that tries to price its shares too aggressively would slam that window shut.

Apptio and Carbon Black declined to comment for this story. Coupa could not immediately be reached for comment.

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