Is Wall Street readying to play Violin?

Contact: Brenon Daly

Even as enterprise-focused IPOs have come back into fashion, one key sector of the IT stack has missed out on the recent parade of multibillion-dollar offerings: storage. Indeed, Wall Street has only really seen one new arrival from the enterprise storage market since a flurry of IPOs a half-decade ago that included Data Domain, Isilon, 3PAR and others. Of course, investors can’t buy shares in hardly any of the storage vendors that went public in 2007-2008 because they’ve pretty much all been snapped up by larger companies.

But there very well may be a new storage company coming to market shortly in what should be a hot offering. Violin Memory is rumored to have filed its IPO paperwork in a confidential filing with the SEC and plans to debut in early 2013. We understand that J.P. Morgan Securities, Deutsche Bank Securities, Bank of America Merrill Lynch and Barclays Capital will lead the planned $300m offering.

Market sources have indicated that the fast-growing flash array provider is targeting an initial valuation of more than $1.5bn, which would be twice the price of its latest funding round. It raised $50m in March. We understand that Violin will record about $125m in sales in the current year, which wraps at the end of January. That would be more than twice the revenue it recorded last year.

Assuming Violin does make it public in January, it would be the first significant enterprise storage offering since fellow solid-state storage startup Fusion-io hit the market in mid-2011. That company debuted at a $1.8bn valuation and has added another $1bn to its market capitalization since then.

The relative drought in storage IPOs stands out even more when we consider the fact that we’ve seen high-flying IPOs from nearly all the other sectors supplying the technology that keeps businesses running. In terms of application software, Workday debuted on Friday at a staggering $7.8bn, while the standout infrastructure software offering, Splunk, has created $3bn in market value since its April debut. Palo Alto Networks, an IT security vendor that went public three months ago, is currently valued at $4.2bn. Even the networking sector has a pair of players ready to hit the market shortly, with both Gigamon and Ruckus Wireless on file now.

For more real-time information on tech M&A, follow us on Twitter @MAKnowledgebase.