Workday Inc., a maker of software that helps companies manage operations, plans to file for an initial public offering next year that would raise as much as $500 million, two people with knowledge of the matter said.
The company would file its plan in the first half and make its debut in the second half, said the people, who asked not to be identified because the plans aren’t public. Workday is likely to hire Allen & Co. to help with the sale, which would raise at least $200 million, the people said. Other banks being considered include Morgan Stanley (MS), Goldman Sachs Group Inc. and JPMorgan Chase & Co., one person said.
Workday software, which handles tasks like payroll and human resources, is delivered through the Internet. The market for such cloud-computing services will surge to $241 billion in 2020 from $40.7 billion this year, according to Forrester Research Inc. (FORR) Workday follows other debuting business-software companies, including Jive Software Inc., which before today had risen 25 percent since its Dec. 12 IPO.
Dell Inc. (DELL) Chief Executive Michael Dell, through his private investment firm MSD Capital, joined the ranks of Workday investors in a recent round of funding, two people with knowledge of the matter said. Workday raised $100 million, the people said, after initially announcing financing of $85 million on Oct. 24.
Christine Cefalo, a spokeswoman for Pleasanton, California- based Workday, didn’t return a phone call seeking comment.
Allen & Co. served as financial adviser in the recent funding round, which was led by new investors, including T. Rowe Price (TROW) Group Inc., Morgan Stanley Investment Management, Janus Capital Group Inc. (JNS) and Bezos Expeditions, the personal investment company of Amazon.com Inc. (AMZN) founder Jeff Bezos.
Workday is recruiting a chief financial officer who can help navigate the IPO process and assist in hiring bankers, one person said, without identifying candidates.
As of October, Workday had more than 230 customers, including consumer-goods maker Kimberly-Clark Corp. (KMB), which recently started to deploy the software to manage 57,000 workers in 60 countries, and electronics manufacturer Flextronics International Ltd. (FLEX), which uses the software for managing more than 200,000 workers. Workday’s sales rose more than 160 percent in 2010, according to the company.
Workday was founded in 2005 by co-Chief Executives Dave Duffield and Aneel Bhusri, both veterans of human-resources software company PeopleSoft Inc. Duffield founded PeopleSoft in the 1980s and served as its CEO. Bhusri, who was a top executive there, is also a partner at venture capital firm Greylock Partners, an investor in Workday.
Workday isn’t for sale, said one person close to the company. Duffield and Bhusri are averse to selling the company because of the experience of Oracle Corp. (ORCL)’s hostile takeover of PeopleSoft, the person said.
Workday would join online-business software companies that have gone public in recent years. SuccessFactors Inc., which is being acquired by SAP AG for $3.4 billion, held its IPO in 2007. NetSuite Inc., majority owned by Oracle Chief Executive Larry Ellison, went public the same year. Salesforce.com Inc., the largest seller of online customer management software, went public in 2004.
To contact the editor responsible for this story: Tom Giles at Tgiles5@bloomberg.net