IPO Gamble in a Confidential Way: Uptick in floats and Palantir is under the spotlight

Summary

• Amid pandemic, the IPO market grounded to a near halt from a past couple of months; we are beginning to witness some movement again, and Palantir new business move might usher in more activity.
• Palantir Technologies has confidentially filed for an IPO with the US Securities and Exchange Commission; this move is taken amid a considerable upswing for technology stocks.
• Palantir is continuing to push ahead in the private markets with the capital raising of ~ US$960 million including ~US$550 million of that already sold, and a further ~ US$411 million remaining to be raised.

While we are progressing with a new normal on the economic front, we are witnessing boosted confidence among the investors, with a flurry of US technology companies that drove NASDAQ to cross the level of 10,000 points. Initial Public Offering (IPO) market is reviving in terms of a surged number of companies going public or have plans to go public.

Lemonade Inc. (NYSE:LMND), an online mobile-based insurance start-up, raised US$319 million in its IPO by debuting on the stock market last week, it ended 7 July 2020 at US$78.79.

Buzzy companies like Vroom and ZoomInfo have also listed themselves on the stock exchange in recent weeks. Vroom, Inc. (NASDAQ:VRM) debuting the stock market with its IPO per share price of US$23 on 9 June 2020.

On the same lines, ZoomInfo Technologies Inc. (NASDAQ:ZI) made a stock market debut in early June, with its IPO price of US$21 per share, which zoomed to US$45.14 on 7 July 2020.

Secrets of Palantir Technologies

Palantir Technologies is the newest addition in a recent stream of tech companies to indicate plans for an IPO. The secretive Silicon Valley data mining and analysis firm is about to become a little more transparent. Being around for more than 15 years, yet only little is known about the company.

On 6 July 2020, the Palo Alto, California, Company publicly announced that it had started a confidential process to list shares and has filed paperwork with the US Securities and Exchange Commission (SEC) to issue shares in an initial public offering.

The Company announced the submission of a draft registration statement, Form S-1, with the SEC related to the proposed public listing of its Class A common stock. It is anticipated that public listing would take place after the completion of the SEC review process, subject to market and other conditions.

Did you read; Palantir Files for IPO

Palantir did not disclose any proposed timing of the offering, or any further details about how many shares it would sell or the share price range for the IPO.

The unveiling of the proposed IPO came in the wake of Palantir’s current fundraising; The Company filed Form D last week and indicated that it is in the process of raising capital worth US$960 million with ~US$550 million of which is already received, and a further ~ US$411 million remaining to be raised.

Did you read; Capital Raising and Share Purchase Plan: Is Bigger, the better?

If you aren't familiar with the concept, the confidential IPO filing mechanism lets a company privately file its registration statement, known as an S-1 with SEC. Furthermore, it allows companies to evade the traditional filing process and keep sensitive information such as financial figures and potential risks out of the hands of competitors, investors, and customers until the date for listing shares gets closer.

This strategy has also been used in other IPOs, notably by companies such as Spotify, Uber, and Slack.

Of late, Palantir has added three new board members; one of them is its first women board member, former Wall Street Journal reporter Alexandra Wolfe Schiff. This move of adding new board member could be ascertained as preparation to go public.

A Sneak Peek at Palantir Technologies

Palantir was founded in 2004 by venture capitalist Peter Thiel and CEO Alex Karp. It’s valued more than US$20 billion and has raised over US$ 3 billion since its formation.

The Company specialises in big data and analytics technologies, working with major corporations and government agencies, including the US government and intelligence community to crunch a substantial amount of information.

Numerous law enforcement and government agencies across the globe use Palantir to compile and search for data on citizens with the intent of combating financial crime, stopping terrorism and recently, keeping a tab on the spread of the pandemic.

However, the Company’s operations are under controversy for the way its tools have been used in the past to compromise privacy and facilitate surveillance. Specifically, the usage of Palantir by the police force and immigration officials has led to several protests.

Did you read How are the Unicorns doing?

The Coronavirus has bolstered the business of the Company as several organisations are using its products to help determine how to re-commence operations.

In April 2020, the Department of Health and Human Services awarded two contracts to the Company worth US$17.4 million and US$7.5 million, to aid in tracking and mitigating COVID-19.

The department quoted the ‘unusual and compelling urgency’ of the COVID-19 as its reason for awarding the no-bid contracts.

Furthermore, The Company is providing Coronavirus monitoring to the Centers for Disease Control and Prevention (CDC) and is helping governments determine where to send equipment.

In late April 2020, the Company had secured its first contract with the Space Force to furnish data integration tools to enhance the understanding related to objects in the space.

Though pandemic has frozen several companies, Palantir’s filling for an IPO in a confidential way demonstrates how the IPO market is heating up yet again.