A year ago, Irvine’s Rivian Automotive Inc. was a month away from going public, in what would turn out to be the largest initial public offering—the electric vehicle maker (Nasdaq: RIVIN) ultimately raised about $13.7 billion—for an American firm since Facebook’s 2014 IPO.
Now, another Irvine-based firm, electronics and technology distribution colossus Ingram Micro Inc., is being tracked as a prominent tech-driven company that plans go public.
If an IPO moves ahead for Ingram, which has been expanding its cloud business, it could help pull the market for new public listings, both in and out of Orange County, out of a rough patch that’s lasted most of 2022 (see story, this page).
Ingram on Sept. 19 posted a two-paragraph statement saying it had filed a “confidential submission” with the Securities and Exchange Commission for a potential IPO.
Plenty of details on the listing have yet to be disclosed, including the number of shares, the price and the timing.
“The initial public offering is expected to take place after the SEC completes its review process, subject to market and other conditions,” Ingram Micro said in the statement.
A company spokesperson declined to provide other details when queried by the Business Journal, saying the process had “just begun.”
2nd Stint, Debt High
Ingram Micro was previously a public company—it raised some $300 million in a 1996 IPO—but went private in late 2016 when it was acquired by China’s HNA Group for $6 billion.
Ownership moved back to American hands in July 2021, when Tom Gores’ investment firm Platinum Equity of Los Angeles paid $7.2 billion for the company.
FitchRatings gave a balanced outlook on Ingram Micro’s proposed IPO in a note to investors on Sept. 22.
While saying it viewed the potential listing “positively,” Fitch also said it “believes positive ratings action is premature as timing and execution of the transaction may be challenged given ongoing weakness in capital markets.”
The S&P 500 index is down over 20% since the start of the year.
Ingram would “likely be induced to commit to debt reduction and potentially to an investment-grade credit profile in order to gain market acceptance for its offering given current leverage of 4.2x and a weaker capital markets backdrop,” FitchRatings said in the report.
Sales Up
Ingram Micro reported $54.5 billion in net sales last year, up 11% from fiscal year 2020, and 27% above the $43 billion in revenue it reported in 2015, prior to being taken private.
It’s the largest private company based in OC by revenue, by a wide margin.
No. 2 Allied Universal—a Santa Ana-based security firm that’s also mulling an IPO in the next few years—had $19 billion in revenue last year.
Ingram Micro is one of the world’s largest wholesale distributors of technology products, including software and cloud products along with other tech items, while providing an array of related marketing services and supply chain offerings for both value-added resellers and tech suppliers.
It represents more than 1,500 suppliers, including Acer, Apple, Cisco, Citrix, HP, IBM, Lenovo, Microsoft, Samsung, Symantec and VMware.
The company’s website boasts of 28,000 employee “associates,” more than 170,000 customers and operations in 61 countries.
Cloud, Exec Changes
Much has changed for the company since its last stint as a public company.
“Ingram Micro for decades was the world’s largest IT distributor. However, its two biggest rivals, Tech Data and Synnex, merged in September of 2021 to form a new company, TD Synnex, creating the new world leader in terms of IT distribution revenue,” according to business website ChannelPartnerInsight.com.
Quarterly revenue for Fremont-based TD Synnex now runs close to $15 billion.
While a majority of Ingram’s revenue is generated in a distribution industry that has notoriously razor-thin margins, in recent years it has focused on newer products and services, in particular cloud-based products that offer higher profits.
Cloud-related work still has a way to go to catch up to distribution. Company spokesman Damon Wright said at the end of 2020 that technology solutions and distribution accounted for more than $40 billion in revenue, or about 80% of the total.
Ingram would go public with a revamped executive setup than before. In January, Paul Bay was promoted to chief executive, while his predecessor Alain Monié transitioned to become executive chairman.
Bay previously held the position of executive vice president and president, Global Technology Solutions.
Micro-IPOs Head 2022 OC Listings
The record year for Orange County-based companies going public was in 2021.
Eleven local companies went public last year via traditional IPOs, while a handful of others went public by reverse mergers using the increasingly popular SPAC (or special purpose acquisition company) route.
The 11 companies that had traditional IPOs last year raised a combined $15.2 billion—an all-time annual record for OC.
It’s been a different story for 2022. Just a handful of small sized IPOs have been completed, raising about $40 million on a combined basis, according to Business Journal research.
In the largest of the local listings, Anaheim EV maker Phoenix Motor Inc. (Nasdaq: PEV) raised about $15 million in a downsized offering in June.
Shares have fallen from a $7.50 offering price to under $2 as of last week, giving the EV maker a valuation around $34 million.
Flat SPACs
New SPAC offerings have also fallen flat on Wall Street.
E-commerce marketing advisor Nogin Inc. (Nasdaq: NOGN) in Tustin went public via a reverse merger with SPAC Software Acquisition Group III in late August.
The company raised over $200 million in cash in the deal, which valued the company at around $660 million when the deal was first announced.
Nogin’s shares dropped 65% after its first day of public trading. The shares were trading for $1.40 apiece as of Oct. 3, down from $10 on opening day, giving it a valuation under $100 million.
—Mark Mueller
