Plucky SolarWinds breaks IPO drought

Texas-based network management and smart grid software specialist SolarWinds broke the recent technology IPO drought this week with a $151m flotation on the New York Stock Exchange.

The firm began trading on Wednesday, having issued just over 12 million shares of its common stock at $12.50 per share.

The company specialises in network management products covering a variety of areas, from fault and performance management through to configuration management and compliance.

There is also a sizeable clean tech component to the company, which is working closely with Cisco on its EnergyWise smart meter programme and provides the networking giant with catalyst switches designed to monitor energy use from IP-connected devices.

The move is a bold step for the company, given the paucity of recent IPOs, and it raised almost $100m less than it expected when it originally filed for an $250m IPO in March last year.

According to IPOHome.com, an information service provided by Renaissance Capital, there have only been six IPOs in the US so far this year, while in the same period last year, there had been 95 IPOs. Data from analyst firm The Cleantech Group similarly confirmed that there have been only four small IPOs in the sector globally so far this year.

However, SolarWinds operates in a relatively buoyant space; IPOs have remained most popular in the technology sector and a recent report from Renaissance said that the most successful IPOs would be lower-risk companies, and deals that did not allow insiders to cash out.

Given SolarWinds' online sales business model, which allows it to operate a low cost base, and its presence in a smart grid sector currently flush with federal funding as a result of President Obama's stimulus package, it is likely to be seen as relatively low risk by investors.

SolarWinds was founded in 1998, and employs 250 people. It is trading on the NYSE as SWI.