McAfee, the cyber security company whose eponymous founder was recently arrested on tax avoidance charges, priced its shares in the lower half of its initial public offering range despite the hot market for newly listed software companies.

Public investors agreed to purchase shares at $20 each, according to people briefed on the discussions, delivering about $620m in proceeds the company plans to mostly put toward its almost $4.8bn debt load. 

At the offering price, McAfee would command a market capitalisation of about $8.6bn, based on the number of shares outstanding. Existing investors were also prepared to sell more than $100m in shares through the offering. The company did not immediately respond to requests for comment.

McAfee enters a buoyant market for software companies, as businesses increasingly rely on their services to manage the shift to remote working during the pandemic

The offering marks a return to public markets for one of the most well-known names in cyber security, whose fortunes have fluctuated in the past decade as it passed between different owners.

McAfee’s current iteration emerged after a period of ownership under the chipmaker Intel, which purchased the company for $7.7bn in 2010. Intel later renamed the business Intel Security. 

In 2016 the private equity group TPG led a spin out that valued the group at $4.2bn, including debt, restoring its original brand name. It has since made a series of acquisitions focused on cloud computing services, a growing area of focus.

McAfee made a profit of $31m on revenues of $1.4bn in the first half of 2020, after recording net losses of $236m last year. 

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The listing comes during a blockbuster year for IPOs in which companies have raised $58.4bn in the US, according to the data provider Refinitiv, making it the busiest period since Alibaba’s listing broke records in 2014.

Column chart of Proceeds raised excluding Spacs ($bn) showing IPOs in the US head for biggest year since 2014

Shares in newly listed software companies have recently enjoyed large jumps in early trading. Snowflake, the cloud data analytics company, doubled in price on its trading debut after raising $3.4bn in this year’s largest IPO, delivering huge gains for backers.

McAfee’s stock offering comes in the form of a complex “Up-C” arrangement, which is common among private equity-backed companies and meant to provide tax benefits to insiders. Intel and private equity investors will retain about 82.2 per cent of the company’s voting power.

The company, whose investment prospectus lists “brand recognition” as a competitive strength, also enjoys an uncomfortable association with its namesake founder, John McAfee. US authorities arrested the entrepreneur and aspiring politician in Spain this month on charges of hiding millions of dollars in taxable income derived from cryptocurrencies and other ventures.

Mr McAfee has not been affiliated with the company since the mid-1990s, and the company’s prospectus made no mention of the founder.

Morgan Stanley, Goldman Sachs, TPG Capital, Bank of America and Citi were joint book runners on the listing.

Via Financial Times