Oklahoma City-based payroll services company Paycom hopes to raise up to $100 million in an initial public offering.
While most of the company’s stock will be controlled by a New York private equity group after the offering, going public could allow Paycom to compete on a larger stage, observers said.
Going public will enable Paycom to better compete with larger payroll and human resources services competitors, like ADP, with a market capitalization of about $37 billion, or Paychex, which has a market capitalization of about $15 billion, said Edmond money manager Greg Womack of Womack Investment Advisers. With a bigger pool of capital raised from shareholders, Paycom could even expand its services and products to better compete with larger companies, he said.
“They can take some of the market share from the big boys and step things up to the next level,” Womack said.
Paycom likely wants to take advantage of the stronger IPO market, particularly for tech companies, said Jake Dollarhide, CEO of Longbow Asset Management Co. in Tulsa.
“After cooling off, only in the last few years have we seen the IPO market get healthier and we’ve seen a record issuance in new stocks, predominantly tech plays like Paycom,” Dollarhide said.
The price of the stock and number of shares issued has yet to be determined.
Paycom will trade on the New York Stock Exchange under the ticker symbol “PAYC.” The company reorganized in Delaware as Paycom Software Inc. in January in anticipation of the public offering, it said in papers filed Monday with the U.S. Securities and Exchange Commission.
The private equity firm, Welsh, Carson, Anderson & Stowe, now holds a 56.6 percent stake in Paycom and will continue to hold a majority stake in the company’s outstanding stock after the public offering, according to Monday’s regulatory filing. Paycom founder Chad Richison currently has a 24.2 percent stake in the company, the filing said.
Paycom’s entire registration statement at sec.gov