Dynatrace Jumps in Trading Debut After $570 Million IPO

(Bloomberg) -- Dynatrace Inc., backed by the private equity firm Thoma Bravo, completed its trading debut up 49% after raising $570 million in its initial public offering.

The company, a subscription-based cloud-computing platform, rose as much as 65% Thursday from its offer price of $16 a share and closed at $23.85, giving the company a market value of $6.71 billion.

“The undercurrent of our roadshow was the deeper the due diligence, the better we looked,” Dynatrace Chief Executive Officer John Van Siclen said in an interview. “That gave us a lot of momentum and I think that showed today in the market.”

Thoma Bravo will remain Dynatrace's controlling shareholder, owning 71% of the company's stock, according to its IPO filings.

The company and current investors sold 35.6 million shares Wednesday, after it elevating its targeted range to $13 to $15 a share from $11 to $13. The share sale included about 1.6 million shares offered by current stockholders including management and employees.

Dynatrace, based in Waltham, Massachusetts, plans to use the IPO proceeds for general corporate purposes and to pay down debt. For the year ended March 31, Dynatrace lost $116 million on revenue of $431 million, according to its filings.

Compuware Connection

Thoma Bravo acquired Dynatrace through its $2.4 billion buyout of Compuware Corp. in 2014. It carved out Compuware's application performance management division and renamed it Dynatrace.

The private equity firm has amassed successful investments in the application, infrastructure and security software and technology-enabled services sectors, which have been its investment focus for more than 15 years, according to Dynatrace's filings.

Thoma Bravo was considering an IPO or a sale for Dynatrace as early as May 2018, people familiar with the matter said at the time.

This year's tech, media and telecom listings that priced above their marketed ranges are trading and average of 89% above their IPO prices, according to data compiled by Bloomberg. Eight of the nine such listings before Dynatrace opened at least 40% above their IPO price on their first day of trading.

Not a Penny

Van Siclen said he expects Thoma Bravo to gradually manage itself out of the business through secondary offerings.

“They're a PE firm that's been in the company for 4.5 years and never taken a penny out of it,” he said. “They'll be orderly about it. Secondaries will certainly be part of that strategy for sure.”

Dynatrace's offering was led by Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc. The shares are trading on the New York Stock Exchange under the symbol DT.

To contact the reporters on this story: Michael Hytha in San Francisco at mhytha@bloomberg.net;Drew Singer in New York at dsinger28@bloomberg.net

To contact the editors responsible for this story: Liana Baker at lbaker75@bloomberg.net, ;Courtney Dentch at cdentch1@bloomberg.net, Michael Hytha, Matthew Monks