Workplace software group UiPath settles for down-round IPO

UiPath, a software company valued at $35bn in February, settled for a reduced valuation for its initial public offering in a sign that public market investors have grown cautious after technology sector share prices soared.

The Romanian-founded, New York-based company, a leader in the fast-growing business task automation sector, priced its shares at $56 for the IPO on Tuesday night, according to two people familiar with the deal.

The price was higher than the company’s marketed range of $52 to $54 but fell short of the $62.28 at which it sold shares in a fundraising in February. UiPath said at the time that the financing gave it a $35bn valuation.

UiPath’s most recent prospectus said it planned to issue 9.4m shares. That would bring in $530m in new capital at the IPO price and give it a market capitalisation of $29.1bn. The company declined to comment.

The pricing is the latest indication that investors have curbed their enthusiasm for the fast-growing software as a service sector.

The BVP Nasdaq Emerging Cloud Index has fallen 17 per cent from a peak in mid-February. The index includes data analytics group Snowflake, which completed the largest software IPO ever last year. 

Some recent public offerings have had tepid receptions, in contrast to blockbuster offerings at the end of last year headlined by Airbnb and DoorDash in December. Compass, the SoftBank-backed real estate brokerage, cut the size of its offering last month, for example.

UiPath sells artificial intelligence-based software that companies use to automate routine tasks such as reading documents and updating databases. This sector, known as robotic process automation, has boomed as companies in fields ranging from healthcare to insurance seek to replace or retrain white collar administrative workers.

Founded in Bucharest in 2005, UiPath spent 10 years developing its technology before raising its first round of venture capital. Its February round of funding made it the second most valuable private venture-backed business software group behind Stripe.

UiPath said it had revenues of $608m for the year ended January 31, an increase of 81 per cent on the previous year. Its net losses narrowed from $520m to $92m.

As part of the offering, public investors were also set to purchase shares from existing backers including the venture capital firm Accel and Coatue Management. Those sales would total more than $810m at Tuesday’s price.

Accel held the largest stake in UiPath before the IPO, with shares worth about $6bn at the offering price.

Daniel Dines, UiPath chief executive, will retain more than 88 per cent of the company’s voting power after its public market debut, through a dual-class share structure. His stake in the business would be worth $1.5bn, including about 1.4m shares he planned to sell in the offering.

Morgan Stanley and JPMorgan served as lead underwriters of the deal.