Cybersecurity Company SecureWorks to Become 2016's First Tech IPO

The tech industry has seen a very slow first quarter, with no IPOs during the period. This is finally set to change, as the cybersecurity sector gears up for the industry’s first IPO of 2016. SecureWorks, Dell’s (NASDAQ:DELL) cybersecurity business, has filed plans to raise upwards of $157.5 million in an IPO.
The Wall Street Journal reported that, on Monday, the company put a price range of $15.50 to $17.50 a share on its initial public offering of stock. If the IPO goes well, the Atlanta-base company will reach a valuation of nearly $1.5 billion.

Slow period for tech IPOs

The news of SecureWorks’ plan to IPO is incredibly exciting for the tech sector, considering the relative stagnation in new public companies over the past three and a half months. The tech industry typically has a fairly robust startup and IPO culture, so this radio silence has spoke volumes to investors. According to CNN Money, the last time that there was no tech IPO in the first quarter happened all the way back in 2009, when the US was deep in the midst of its recession.
A tough stock market has deterred private tech companies from taking the risk of fluctuating share prices. However, the waters appeared to have stilled, and SecureWorks is taking the brave step towards going public.

Big plans for SecureWorks

SecureWorks’ IPO will set an important precedent for other cybersecurity companies considering going public in this market. The IPO coincides with Dell’s efforts to close a $67 billion takeover of EMC (NYSE:EMC), which is poised to be the biggest tech deal in history. However, reports suggest that the SecureWorks’ proceeds from the IPO will go towards funding the company, not Dell. Nonetheless, since Dell owns a majority stock of SecureWorks, it’s likely that a successful move towards the mobile market would generate additional asset value for Dell. SecureWorks intends to trade on NASDAQ under the ticker symbol “SCWX.”
So why invest in SecureWorks? The short answer is the booming cybersecurity industry. Cyber attacks directed to the White House, Sony, and Ashley Madison over the past couple of years have made consumers wary of online risks. Thus, SecureWorks’ technology – designed to keep hackers out of secure systems – is deeply appealing to an anxious market.

Other companies poised to go public

SecureWorks isn’t the only company with an IPO on the horizon. Bats Global Markets is expected to IPO in the near future, as is real-estate investment trust MGM Growth Properties. It’s possible that the MGM Growth Properties IPO could raise as much as $1.2 billion. Therefore, the tides are really turning for the market. What started out in January as a very challenging and quiet landscape is now generating the IPO buzz that has been typical over the last few quarters. As Kathleen Smith, principal at Renaissance Capital, told CNN Money: “it’s a dry spell but finally it looks like the market is opening up.”
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Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.