ForeScout files to raise $160m in secondary offering

ForeScout Photo: Prospectus
ForeScout Photo: Prospectus

The cybersecurity company's share price has risen 57% since its Nasdaq IPO five months ago.

Almost five months have passed since cybersecurity company ForeScout Technologies Inc. (Nasdaq: FCST) held its IPO on Nasdaq, and the company's share price has meanwhile climbed 56.7%. Given the increase in its value, the company is now planning a secondary offering, and late last week submitted a prospectus for raising up to $160 million.

ForeScout raised $124 million net in its IPO at $22 per share, reflecting a company value of $814 million. The company's market cap is now $1.3 billion, and its share price is $34.50.

The underwriters for the secondary offering are Morgan Stanley, JP Morgan, and Citigroup, together with Stephens, UBS, and KeyBanc Capital. At the company's current share price, raising $160 million means issuing 4.6 million new shares, which will constitute 14.5% of ForeScout's share capital following the secondary offering. ForeScout was founded by chairman Hezy Yeshurun, CTO Oded Comay, chief architect Dror Comay, Doron Shikmoni, and Noga Alon. 171 of its 809 employees are in Israel.

ForeScout provides cybersecurity services for a network using the agentless approach - the software is provided without being installed in the end-user station - and calls itself a leader in the Internet of Things (IoT) security market.

The company had $191 million in cash at the end of 2017. ForeScout plans to allocate the proceeds from the offering now being planned to pay for some of the expected withholding tax and various obligations involving the restricted shares allocated to its employees, working capital, marketing and sales activity, product development, and capital expenses. Before it uses the money from the offering ForeScout will invest the capital it raises in rated interest-bearing short-term investments.

As of now, ForeScout's shareholders are still in the lockup period, preventing them from selling their holdings, but this period will expire on April 25, so if the secondary offering takes place after this date, it is likely to also include an offer for sale.

No shareholder sold shares in ForeScout's IPO. Prominent shareholders in the company include UK firm Amadeus Capital, US fund Accel, and Meritech Capital (10% each); Wellington Management (7.9%); ForeScout president and CEO Michael DeCesare (3.8%, with a current value of $51.7 million); and Yeshurun (1.5%, with a current value of $19.5 million). DeCesare's salary in 2017 was $3.3 million.

ForeScout's revenue grew 32.4% to $221 million in 2017, and its net accounting loss was $104 million, up from $74.8 million in 2016.

On a non-GAAP basis, excluding various accounting items, the company's 2017 net loss was $47.9 million, 19% less than it lost in 2016. The company's guidance for 2018 includes 17.7-22.2% revenue growth ($260-270 million in revenue) and a net loss of $1.13-1.21 per share.

Published by Globes [online], Israel Business News - www.globes-online.com - on March 19, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

ForeScout Photo: Prospectus
ForeScout Photo: Prospectus
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