NetSuite Files to Raise Up to $118 Million in IPO

NetSuite, a software maker majority-owned by Oracle Chief Executive Larry Ellison, Tuesday raised the proceeds it expects from its initial public offering, which is due later this week.

The San Mateo, California company's new target is $118 million, up from an earlier forecast of up to $100 million.

NetSuite offers business software over the Web to small and miid-sized companies, an emerging market that many software companies, including Microsoft, Intuit and SAP, have branched into. NetSuite, founded in 1998, has yet to turn a profit.

NetSuite's offering is expected to price late Wednesday, and debut on the New York Stock Exchange on Thursday under the symbol "N" -- only the second single-letter ticker symbol to be handed out by the Big Board this year, after Macy's won the sought-after one-letter designation in March.

NetSuite, in an amended registration statement with the U.S. Securities and Exchange Commission raised the estimated price range for its IPO to $16 to $19 per share.

The previous price range for the 6.2 million share offering was $13 to $16 per share.

NetSuite's offering, a modified Dutch auction, is being led by Credit Suisse, and W.R. Hambrecht as co-manager. Underwriters have the option to purchase an additional 930,000 shares to cover over-allotments.

The auction process, which is being managed electronically through a dedicated Web site, http://www.netsuiteipo.com, kicked off last week.The company decided to use the auction format to allow both institutional and individual investors to secure IPO shares, a source familiar with the transaction told Reuters last week.

Typically, institutional investors snap up IPO shares, leaving individual investors out in the cold.

NetSuite plans to use the auction process to set the offering's clearing price, which is the highest price at which all of the shares offered may be sold to investors.

While not common, auction-based IPOs have been used for some high-profile IPOs. Options-trading firm Interactive Brokers Group raised $1.2 billion earlier this year, and Google used a modified auction format in its 2004 offering.

NetSuite, which is the last scheduled U.S. IPO for the year and 2007's third auction-format offering, said it would use the proceeds to pay down a line of credit from an Ellison-controlled company which had a balance of $8 million at Sept. 30 and for capital expenditures, including a second data center.

Ellison, who is also Oracle's largest shareholder, has transferred his directly owned stake in NetSuite into a "lockbox" company, effectively stripping him of voting rights, to reduce conflict-of-interest concerns, given his large stake in both software companies, the company said in a regulatory filing on Monday.

NetSuite targets small and mid-size companies, while Oracle's customers are generally large corporations.