Netezza, Dice get IPOs rolling again in 2nd half

Two private equity-backed companies—Dice Holdings and Netezza—leapt into the public markets last week with offerings that generated sizeable returns for investors.

The offerings marked the first PE-backed IPOs in more than two weeks, as the new-issues market regained some of the momentum from its first half surge following an early July pause. A total of 43 VC-backed companies went public in the first six months of year, raising $6.35 billion, compared to 27 IPOs raising more than $2 billion in the same period last year.

First-day returns for the latest new offerings were mixed as Dice (NYSE: DHX) shares edged up a little and Netezza (Nasdaq: NTZA) soared after its first day of trading.

Netezza, a Framingham, Mass.-based provider of data warehouse appliances, saw its shares rise 45% to close at $17.39 in first-day trading Thursday. The company had priced its 9 million share offering at $12 per share a day earlier, above its projected range of $9 to $11.

VCs did well on the exit. The five largest investors in Netezza, a provider of data warehouse appliances, owned stakes valued at more than $600 million, in total, based on Thursday’s closing share price. Matrix Partners held the largest stake at 19.6 million shares, valued at more than $160 million. Other large investors included Charles River Partners (9.1 million shares, valued at about $155 million); Battery Ventures (7.8 million shares, valued at $133 million); Sequoia Capital (7 million shares, valued at $119 million); and Meritech Capital Partners (3.1 million shares, valued at $53 million).

Investors put about $74 million in funding in the company between 2000 and 2005, divided over six rounds of financing, according to Thomson Financial (Publisher of PE Week).

Although Netezza is not profitable, it has been paring losses in recent quarters amid surging revenue based on the rising demand for data warehousing applications. In the first quarter of this year, the company reported a loss of $1.9 million on sales of $25 million, compared to a loss of $4.1 million on about $12 million in revenue in the same quarter the year before.

While Netezza received a warm welcome on Wall Street, Dice Holdings got a flatter reception.

Shares of the New York-based company, which operates career websites, gained 3% in first-day trading Wednesday to close at $13.40. The night before, the company priced its $16.7 million share offering at $13 per share, the high end of its projected $11 to $13 range.

Private equity backers banked immediate returns from the IPO. Of the shares being sold, 6.7 million were offered by the company and 10 million were from selling stockholders, which included private equity firms General Atlantic Partners and Quadrangle Capital Partners. The firms had acquired Dice in 2005 for an undisclosed sum.

Dice Holdings, formerly known as Dice Inc., went public once before, in 1998, after raising about $22 million from Warburg Pincus and other venture backers. Dice filed for bankruptcy a few years later, emerging from reorganization as a privately held entity in 2003. Today, Dice is operating in the black, after wiping debt off its balance sheet in the bankruptcy reorganization. It reported operating income of $4.1 million on sales of $30 million in Q1, up from $2 million in operating income on revenue of $16.1 million the year ago quarter.

General Atlantic and Quadrangle sold about a quarter and a third of their shares in the company, respectively, in last week’s offering.