Navan to seek automatic IPO effectiveness
In a sign of bankers and issuers’ growing impatience with the government shutdown, Navan may follow MapLight Therapeutics’ footsteps and move ahead with its US$900m IPO without the SEC’s explicit approval.
The 14-strong syndicate led by Goldman Sachs, Citigroup, Jefferies, Mizuho Securities and Morgan Stanley may file as soon as Friday the revised listing filing that kicks off the 20-day countdown to automatic listing effectiveness, a banker on the deal said.
The travel and expense management company was supposed to start its public roadshow on Monday, after publicly filing on September 22. But as the federal government shut down on October 1, Navan’s listing plan was pushed back.
It’s a surprise to hear that a tech company is going to remove the so-called “delaying amendment” in order to proceed as such a move is restrictive and risky.
To proceed, Navan must fix terms on the IPO, a bold move for a tech company. Think Gemini with its US$7 upward shift in IPO marketing range and above-range pricing.
There is pressure to proceed and no end in sight to the shutdown.
Navan got US$155m in funding in February and April, in exchange it issued warrants that allow the lenders to buy shares at a 15% discount. The Simple Agreements for Future Equity carries a 12% annual coupon rate.
Navan also made promises to Series F and G convertible preferred investors Premji Invest and Greenoaks Capital Partners to buy up to 5% of the IPO offering. That last round in 2022 round valued Navan at US$9.2bn.
There's also a US$130m facility with Vista Equity Partners that charges 6.5%, and Navan intends to pay back with IPO proceeds.
As the stalemate over government spending drags on, many other listing hopefuls are in the same boat as Navan, frustrated by the man-made hindrance to the capital markets.
Those who have a calendar accounting year have until November 12 to market and price their IPO before their Q2 results go stale and will need to be refreshed to move forward.
Fortunately for Navan, its fiscal year ends January 31, giving it an extra month before it needs to update its financials.