(Updated at 4:30 p.m. with closing stock price)
DETROIT (WWJ) – Shares in Detroit’s newest tech stock soared Thursday, the first day of their trading on the Nasdaq Global Select Market.
Shares of Covisint Corp. (Nasdaq: COVS) jumped 23 percent to close at $12.31 a share after the company’s initial public offering of 6.4 million shares went on the market at Thursday’s open at $10 a share. The shares hit as high as $13.74 during the day.
Covisint is a subsidiary of the Detroit software and IT services provider Compuware Corp. (Nasdaq: CPWR). It provides secure business communication technology.
The 6.4 million shares of Covisint stock being sold represent 17.6 percent of Covisint’s total shares now outstanding. The rest remain held by Compuware. The IPO’s underwriters have also been given the authority a 30-day option to sell up to 960,000 more shares if there’s sufficient demand.
Compuware said Credit Suisse acted as lead bookrunner for the offering, with Pacific Crest Securities acting as joint bookrunner. Evercore acted as co-manager.
The detailed prospectus of this stock offering is online in the federal Securities and Exchange Commission database at this link.
Covisint was founded in 2000 by the Detroit Three automakers to provide secure electronic data interchange between the automakers and suppliers. Compuware purchased Covisint in 2004. The company has since expanded into providing an online communication service for other industries, including health care, oil and gas, and financial services. The prospectus says it stopped operating as a Compuware division and began life as an entirely separate corporation Jan. 1, 2013.
In the prospectus, Covisint estimated its total net proceeds from the offering would be $58.5 million — $67.5 million if the underwriters sell the full “over-allotment option.” Covisint said it will use the proceeds for “working capital and other general corporate purposes, including to finance our growth, develop new solutions, repay short-term intercompany payables owed to Compuware, hire additional personnel and fund capital expenditures and potential acquisitions.”
Covisint said it had revenue of $90.7 million in the fiscal year ended March 31, 2013, up from $74.7 million the prior year and $54.2 million the year before that. It posted a loss of $5.6 million in its most recent fiscal year, a loss of $3.3 million the year before and a loss of $1.1 million the year before that.
The prospectus said Covisint’s losses stemmed from “substantial investments we made, and continue to make, to build our solutions and services, grow and maintain our business and acquire customers.” The company also said it could provide no date in the future at which it would achieve profitability.
Covisint’s prospectus said the auto, health care and financial services industry are experiencing rapid growth in demand for secure access to critical information quickly, in systems that can grow their volume of data rapidly and reliably, in ways that comply with regulatory requirements.
The prospectus also disclosed a long list of risk factors, including industry risk — Covisint got 53 percent of its fiscal 2013 revenue from the auto industry — 27 percent from General Motors alone — and 31 percent from the health care industry, and any downturn in those industries could hurt its business.
More at http://www.covisint.com.
Compuware was founded in 1973. Its oldest products are debugging programs for large mainframe computers. Today the company also provides a wide variety of application performance monitoring software as well as IT services.
More at http://www.compuware.com.