In an updated S-1 filed with the Securities and Exchange Commission (SEC) on Wednesday, Unity Software raised the stock price for its upcoming initial public offering (IPO) to a range of $44 to $48, up from a range of $34 to $42. With more than 263 million shares outstanding, this would value the company at between $11.6 billion and $12.6 billion.
Including the overallotment, there are as many as 28.75 million shares up for grabs, increasing the amount Unity could raise to as much as $1.38 billion at the high end of the increased range. This would be more than double the estimated $6 billion valuation that accompanied Unity's private equity raise in mid-2019.
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An increasing price range leading into an IPO typically indicates strong investor interest in the offering.
The move comes after Unity Software took control of the pricing process, hoping to leave less money on the table than other recent IPOs. These include Snowflake (SNOW +1.13%) and JFrog (FROG +0.94%), which soared 113% and 47%, respectively, on the first day of trading, potentially costing the companies millions.
Foregoing the usual process that sees the investment bankers calling the shots, Unity CEO John Riccitiello decided to hold a makeshift online auction. Institutional investors were asked what price they were willing to pay and how many shares they wanted to buy. They were also encouraged to submit multiple bids at various prices.
Management used the responses to gauge interest and arrive at an estimated stock price range. Unity plans to issue shares to investors that bid above the threshold price, allocating shares among the interested buyers. Unity hopes that by doing so, it will raise more from the IPO than it would through the typical process, which enriches investment bankers and institutional investors.
