ZoomInfo prices $8bn IPO above expectations

Via Financial Times

The business database provider ZoomInfo raised $935m on Wednesday from an initial public offering that received strong investor demand, the second signal within 24 hours that the market for new US public listings is thawing after a three-month freeze.

The offering marked the first significant US technology IPO since the pandemic rattled financial markets in late February.

It also offered further evidence of the pent-up demand investors had for the shares of newly public companies. Only hours earlier, shares in Warner Music surged 20 per cent on their debut, valuing the music label at $15.4bn.

Together with the clinical-stage biotechnology group Pliant Therapeutics, which priced its IPO on Tuesday, the offerings have helped to make the busiest week for new listings in the US this year, according to the financial data provider Refinitiv.

ZoomInfo sold 44.5m shares at $21 each, exceeding its targeted range of $19 to $20, according to two people briefed on the matter. The company declined to comment.

The company had already increased the price range of the offering, and the $21 share price gives the group a market capitalisation of more than $8bn.

Its public debut marks a quick turnround for its private equity backers including the Carlyle Group, which purchased a minority stake in the business in 2018. Formerly known as DiscoverOrg, the Washington state-based company renamed after purchasing the business contacts database Zoom Information last year.

Investors have shown a strong appetite for shares of subscription-based software companies such as Datadog, following a string of disappointing consumer tech listings last year.

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More than 200,000 users pay for subscriptions to ZoomInfo, which claims to use machine learning to help sales and marketing professionals identify new customers. The company posted a small net loss of $5.9m in the first quarter on revenues of $102.2m.

ZoomInfo — not to be confused with the video conferencing service Zoom — said it had eliminated “fewer than 100 positions” in April after reviewing growth targets in light of Covid-19.

Like many private equity-backed companies, ZoomInfo employs a complex “up-C” organisational structure that grants preferential tax treatment to insiders. The company’s founders and private equity backers will also own close to 90 per cent of outstanding voting stock following its listing.

Dragoneer Investment Group and the mutual fund managers BlackRock and Fidelity each committed to purchase up to $100m in shares in the offering, which is being underwritten by JPMorgan Chase and Morgan Stanley.

The company’s shares are scheduled to begin trading on the Nasdaq exchange on Thursday under the ticker ZI.