Snowflake completes largest software IPO

Snowflake made the largest public offering ever for the US software company, the latest sign of Wall Street’s massive demand for cloud computing services businesses.

Investors agreed to buy 28m shares of Snowflake, which was valued at $ 120, said people offered a $ 3.4 billion increase in income for the cloud software company. This value would give the company a market capitalization of over $ 33 billion based on the number of outstanding shares.

Snowflake’s share price fell from the company’s target range of $ 100 to $ 110, which was up more than a quarter earlier this week. The company’s market value is more than two-and-a-half times the value of $ 12.4 billion achieved in February in its most recent fundraising round. It declined to comment on pricing.

Snowflake’s IPO will make it a publicly listed company in the cloud software industry.

According to data provider Refinitive, the offer is the largest in the year and the largest in the US since Uber’s $ 8.1 billion flattening in May last year. The majority of VMware, a cloud computing company owned by Dame, first completed the largest software IPO in 2007.

Snowflake has attracted investors with a rapidly growing base of customers for its data warehousing product, which allows users to analyze data across multiple remote storage providers such as Amazon Web Services.

The company’s revenue was up 121 percent in the second quarter from the same period last year, and it claims a higher “net retention” number, which measures customer loyalty.

Like many tech start-ups, Snowflake burned through cash to gain market share, posting a net loss of $ 348.5m on revenue of $ 264.7m in its most recent financial year.

The IPO gained an edge last week after Warren Buffett’s Berkshire Hathaway and Salesforce agreed to $ 250m for each purchase in stock with flotation. Berkshire purchased an additional $ 320m from Bob Muglia, the company’s former chief executive.

Frank Slotman, current chief executive of Snowflake, formerly an IPO for tech companies Data Domain and Services.

The venture capital group Sutter Hill Ventures is set to get the largest prize back from the company’s listing, owning more than 20 percent of its shares before the offer.

The listing of snowflakes is further evidenced by the increasing demand from tech companies that benefit in remote operations. The BVP Nasdaq Emerging Cloud Index, which monitors cloud software companies, has gained nearly 59 percent this year, doubling the returns of the broader tech-heavy Nasdaq index.

Snowflake’s flotation also comes during a busy week for an IPO, with a dozen companies set to join the US stock market.

Video game software company Unity could raise more than $ 1bn in an offering this weekend, while another data platform, and Israeli software development company JFrog, are also planning a listing.

Snowflake’s deal in June eclipses two listings that previously stood as the biggest this year: Royalty Pharma, which raised $ 2.5bn and Warner Music with $ 2.2bn.

According to Refinitiv, recent activity has raised the amount raised since 2014 to the highest level since 2014. Alibaba’s $ 25 billion flotation in that year set a record for the world’s largest.

Goldman Sachs and Morgan Stanley acted as lead underwriters on Snowflake’s offering.