Bentley maybe inching towards an IPO again?!

Feb 14, 2020 | Hot Topics

Bentley issued a terse press release yesterday, saying in its entirety

EXTON, Pa., U.S.A. – February 13, 2020 – Bentley Systems, Incorporated today announced that it has confidentially submitted a draft registration statement on form S-1 with the Securities and Exchange Commission (the “SEC”) relating to the proposed public listing of its Class B common stock. The public listing is expected to take place after the SEC completes its review process, subject to market and other conditions.

This press release does not constitute an offer to sell or the solicitation of an offer to buy any securities, and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale would be unlawful prior to registration or qualification under the securities laws of that jurisdiction. Any offers, solicitations or offers to buy, or any sales of securities will be made in accordance with the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). This announcement is being made pursuant to and in accordance with Rule 135 under the Securities Act.

What? Why? Now? it’s been a long week of earnings and investor calls so I may be a bit biased but here’s my take:

There’s never been, in the years I’ve been an industry analyst, so much interest in the world of AEC and construction software. That’s what Bentley makes, so the market for any shares it chooses to sell should be good. In principle, of course — financials, sales channels and all the rest need to be solid; just having a desirable offering may no longer be enough to appeal to investors who are tired of funding Uber, AirBnB and other companies that don’t have Bentley’s (likely) solid business model.

Bentley has shown interest in going public before. Once, in 2000 or so, and then again a couple of years ago. It withdrew the first time, because the market wasn’t great and the return wouldn’t have been what the IPO team thought the shares were worth. More recently, it wound up striking a deal with Siemens to create a private market. In both cases, Bentley wanted to make a way for longtime, vested employees to sell shares and (at least in the first one) to raise some outside capital for expansion.

This time, perhaps the thinking goes, Bentley could cash in on the general enthusiasm for software that’s sold into the AEC sector while also providing a way for employees and, perhaps, Siemens, to see a return on their shares.

Going back to Bentley’s announcement: this isn’t a commitment to actually go public, if you read carefully. They’ve filed with the SEC for a review, in case they decide the market is auspicious — which may or may not happen. If I remember from 2018, Bentley told me about a ratio they watched to decide if/when to pull the trigger and actually sell the stock. That was the VIX, the Chicago Board Options Exchange Volatility Index, which looks at options for S&P 500 shares. When Bentley decided in 2015 not to IPO, the VIX was up and down — $16 on 1 July; $40 in August, $15 on 30 October. As I understood it then, a low VIX means calm investors and lots of IPOs, a high VIX means uncertainty and fewer IPOs. Looking at the VIX today, it’s 13.91, up from a low of 11.50 in November and below a high of 20.56 last February — a much smaller band that in 2015. Does this mean this IPO will happen? Dunno, since there are lots of other factors to consider Dunno, since there are lots of other factors to consider — but at least there seems to be less volatility.

For now, all we know is that an IPO is a possibility, stronger than it was a month ago, but no means a certainty.