SciQuest Shares Surge After $57 Million Software IPO

SciQuest Inc., the provider of procurement software to colleges, drugmakers and governments, surged 29 percent after raising $57 million in the third U.S. initial public offering of September.

SciQuest climbed $2.77 to $12.27 in Nasdaq Stock Market trading today. The Cary, North Carolina-based company sold 6 million shares at $9.50 each yesterday after offering them for as much as $11.50 apiece, a filing with the Securities and Exchange Commission and data compiled by Bloomberg showed.

The offering came after Beijing-based SouFun Holdings Ltd. posted this year’s second-biggest first-day rally for a U.S. IPO on Sept. 17. At least eight more sales are scheduled this month as more than half the companies that submitted plans for IPOs in 2010 wait to complete them, data compiled by Bloomberg show.

“The new IPO cycle seems to have started off quite successfully,” said Josef Schuster, the Chicago-based founder of IPOX Capital Management LLC, which oversees $3 billion. “This should lay a positive groundwork for the IPOs coming up next week.”

SciQuest, which has more than 165 customers from Yale University in New Haven, Connecticut, to Roche Holding AG of Basel, Switzerland, and the State of Georgia, will use proceeds to redeem preferred stock and for working capital, the filing said. SciQuest may also use some of the money for acquisitions, according to the filing.

Relative Value

At the midpoint price of $10.50, SciQuest’s shares would have been valued at 4.3 times next year’s estimated sales, according to Independent International Investment Research Plc in London. That compares with an average of 3.9 times for five automation software providers from Redmond, Washington-based Concur Technologies Inc. to Ariba Inc. of Sunnyvale, California.

“There is a steeper discount right now that companies have to take to be active in the new issue market,” Stephen Wiehe, SciQuest’s chief executive officer, said in an interview. “Frankly, we were very surprised about the very positive and very energetic reception we had.”

SciQuest was acquired by Trinity Ventures in 2004, according to Independent International Investment Research. The Menlo Park, California-based venture capital firm owned a 51 percent stake in SciQuest before the sale.

Stifel Financial Corp. of St. Louis led the offering, while SciQuest turned to Morris, Manning & Martin LLP in Atlanta for legal advice.