Mastercard-backed AvidXchange valued at $4.6 billion in tepid Nasdaq debut

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(Businesshala) – Business payments firm AvidExchange Inc. reported a market capitalization of about $4.62 billion at the start of the market on Wednesday, reflecting investor concerns of increasing volatility in US capital markets.

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Shares of AVIDXchange, which counts Mastercard Inc. among its investors, opened at $24.14, 3.4% less than its initial public offering (IPO) price of $25 per share.

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A group of public market-linked companies have recently put their plans on hold amid adverse market conditions. Peloton rival IFIT postponed its IPO indefinitely, while GIC-backed clinical trials firm WCG withdrew its IPO altogether.

AVIDXchange, which makes software that automates payments, invoicing and accounting for small and medium-sized businesses, raised $660 million in its upsized IPO on Tuesday by selling 26.4 million shares.

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Financial technology firms that facilitate payments for businesses have been highly successful over the past year, as the COVID-19 pandemic accelerated the digital transition across industries.

Mike Prager, co-founder and CEO of AVIDXchange, told Businesshala that proceeds from the IPO will be used to invest in product development, sales and marketing, and expand its employee base.

“We may use a portion of net proceeds for acquisitions or strategic investments in complementary businesses, products, services or technologies,” he said.

Prager, however, said the company has no definite plans for such investments or acquisitions.

Founded in 2000, AVIDXchange processed approximately 58 million transactions over the past 12 months until the second quarter of 2021.

Given that AVIDXchange’s product caters to mid-market businesses, Prager believes the current inefficiencies and trends in the segment are a large and growing opportunity for the company.

It counts more than 7,000 North American companies as its customers and has offices in seven cities in the United States.

Goldman Sachs and JP Morgan were the principal underwriters of the offering.

Reporting by Sohini Poddar in Bengaluru; Editing by Uttaresh V and Shailesh Kuber

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