Firm seeks $99m for expansion

NetSuite is to go public to generate funds for expansion, according to documents filed with the US Securities and Exchange Commission.

The software-as-a-service company said that it will auction off 6.2 million shares for $13 to $16, giving the company a market capitalisation of $773m to $952m.

The valuation will be good news for Larry Ellison, who owns 60 per cent of NetSuite via Oracle's Tako Ventures investment arm.

"We plan to use the net proceeds of the offering to retire the outstanding balance ($8m as of September 30) on the secured line of credit with Tako Ventures for capital expenditures of approximately $10m to $15m and for working capital and other general purposes," said NetSuite in the filing.

"We may also use a portion of the proceeds from the offering to acquire other businesses, products or technologies."

Part of the money will be devoted to a new data centre, as existing facilities offer only tape backup of data, or real-time for those who pay.

"We intend to add an additional data centre facility in 2008, which will be used for disaster recovery and to add capacity," said the company.

"Our data facility is located in an area known for seismic activity, increasing our susceptibility to the risk that an earthquake could significantly harm the operations of this facility.

"It could also be subject to break-ins, computer viruses, sabotage, intentional acts of vandalism and other misconduct."

NetSuite plans to target small and medium sized businesses, as well as local divisions of multinationals, but acknowledges that the market is unusually price sensitive in this sector.