Informatica LLC, the enterprise data management specialist, has raised $841 million in its initial public offering by selling 29 million shares to investors at $29 apiece.

Following the Tuesday afternoon stock sale, Informatica’s shares debuted on the New York Stock Exchange this morning below the IPO price, but soon recovered their losses. The company is now trading slightly above $29. 

The $29 that Informatica fetched for each of its shares represents the low end of the target price range for the IPO. However, Reuters reported that Informatica still managed to achieve a market capitalization of $7.5 billion. That’s well above the $5.3 billion valuation that the company received in 2015 after being taken private by Permira and the Canadian Pension Plan Investment Board.

Prior to 2015, Informatica operated as a publicly traded company for more than a decade. 

A key reason why Informatica’s valuation has increased so significantly since then is that the company followed up the acquisition by launching a broad effort to refocus from selling software licenses to providing cloud services. Informatica has spent more than $1 billion on research and development as part of the effort. The result: The Intelligent Data Management Cloud, a platform introduced this past April that includes over 200 individual services.

One of the main tasks Intelligent Data Management Cloud automates is moving data among applications.

There are many situations where companies require the ability to transfer information among disparate systems. If an enterprise wishes to analyze sales logs for insight into customer buying preferences, the data must first be sent from the sales database to an analytics tool. If two subsidiaries need to share product pricing information, they have to find a way of syncing the relevant information between their respective systems.

Part of the reason companies require products such as Informatica’s Intelligent Data Management Cloud is that different applications store data in different ways. As a result, moving records from one application to another often requires changing the format in which the information is stored. Along the way, companies have to ensure that their data doesn’t contain any errors and is being used in compliance with regulatory rules, tasks with which Informatica helps as well.

The company says its software is used by thousands of enterprises, including many of the firms on the Fortune 500 list. The company generated a total of $675.5 million in revenue across its customer base during the six months ended June 30, up from $619.3 million a year prior.

Informatica is increasingly investing in artificial intelligence to ensure demand for its platform will continue growing. The company has built an AI engine into the platform that promises to streamline many common data management tasks, such as combining records from different sources and identifying erroneous information.

Even with its investments in AI and other new features, Informatica managed to move closer to profitability during the six months ended June 30. The company more than halved its net loss to $36.3 million.

Informatica will use the IPO proceeds to pay down a part of the debt that the company incurred when it was taken private in 2015. Informatica Chief Financial Officer Eric Brown told the Wall Street Journal that the company’s ratio of net debt to adjusted earnings before interest, taxes, depreciation and amortization is set to decline from 5.5 times to 3.9. The plan is to reduce the net debt ratio to two times adjusted earnings over the next two to three years.

Permira and the Canadian Pension Plan Investment Board have retained an 85% stake in Informatica following the IPO. The company’s ticker symbol is INFA.

Photo: Informatica