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Software Developer Ceridian to Go Public This Week

Software Developer Ceridian to Go Public This Week

The Bloomington-based company is hoping to raise $420 million from investors, on top of a planned $100 million share purchase from two private equity firms.

Another Minnesota company’s shares are expected to hit the Wall Street trading floor this week.
 
Bloomington-based human resources software developer Ceridian HCM Holdings Inc. is planning to open up 21 million shares to the public on Thursday in hopes of raising $420 million. The company is pricing its stock between $19 and $21 a piece.
 
Its shares will be listed under “CDAY” on both the New York Stock Exchange and Toronto Stock Exchange.
 
Among IPOs from Minnesota companies, Ceridian’s fundraising goal ranks considerably higher than others in recent memory. Last year’s largest raise came from New Brighton-based gene editing agriculture company Calyxt, which sold $56 million worth of its shares during its IPO. The only other offerings to come from the state in 2017 were from cell diagnostics firm Celcuity (raised $26.2 million) and construction equipment maker ASV Holdings Inc. (raised $26.6 million). Additionally, last March, Bridgewater Bancshares in Bloomington raised $78.7 million from its IPO.
 
At the start of April, Ceridian projected it’d take in $200 million from its offering. That figure was updated, per the company’s SEC filing Tuesday, along with details regarding the use of its proceeds.
 
In tandem with its IPO, private equity firms Thomas H. Lee Partners and Cannae Investors LLC will be acquiring $100 million worth of Ceridian stock. That, however, will be separate from Ceridian’s $420 million goal. Assuming its shares sell at the midpoint of its range — $20 a share — Ceridian believes it could raise a little over $483 million in total after deducting underwriting discounts and other expenses. If underwriters exercise their option to purchase additional shares, that figure could jump to nearly $543 million at the $20 price point, Ceridian said in its filing.
 
With that capital on hand, Ceridian plans to redeem the $475 million principal amount of its outstanding senior notes due 2021, as well as pay some of the interest accrued on those senior notes.
 
Separate from the IPO, the local software developer will also be spinning off its employee engagement and wellbeing business LifeWorks. The company plans to distribute its interest in LifeWorks to existing stockholders on a pro rata basis. Without LifeWorks under its wing, Ceridian expects to take a roughly $80 million hit to its revenue based on LifeWorks’ performance last year.
 
Ceridian reported $750.7 million in revenue and a net loss of $9.2 million in its 2017 fiscal year compared to $704.2 million in revenue and a $92.9 million net loss the year prior.
 
Early next month, a third company out of Minnesota is expected to go public: A sleep apnea device maker out of Maple Grove, called Inspire Medical Systems Inc., will be selling approximately 5 million shares priced between $14 and $16 a piece. The company expects its IPO, set to take place May 3, could bring in as much as $77.5 million from investors after underwriter discounts and other expenses.