SAN LEANDRO -- The changing landscape of health insurance and other human resources functions is playing directly into the hands of TriNet Group, an outsourcing company that was valued at more than $1 billion in its initial public offering, an amount that grew quickly in the stock's market debut Thursday.
TriNet sold 15 million shares for $16 apiece, the middle of its expected price range, to generate $240 million in capital with a valuation of $1.09 billion. When the shares hit the New York Stock Exchange floor Thursday morning under the ticker symbol TNET, prices jumped as high as $19.45 before closing at $19.10, a 19.4 percent increase from the IPO price.
CEO Burton Goldfield, who rang the bell Thursday morning to start trading on the NYSE, called the IPO "a life-changing experience."
"I think we're just getting started," Goldfield said of his 26-year-old company. "This is a beginning, not an end."
Goldfield's company, based across the street from the San Leandro BART station, performs the functions of a human resources department for small to medium-size businesses, offering a cloud platform with mobile apps, 105 different medical plans and a human face when needed. With the Affordable Care Act adding new, complicated rules for benefit providers, TriNet's services have grown more popular, with revenue nearly doubling from 2011 to 2013, when the company reported $1.64 billion in total revenue.
"The Affordable Care Act has been a great uplift to my business," Goldfield admitted, adding, "We love complexity, because when we solve the problem for one small business, we've solved it for all 8,900 of our small businesses."
While TriNet has experienced rapid revenue growth usually associated with startups instead of businesses that have been around for more than two decades, Goldfield expects revenue to continue growing at an organic rate of 15 percent in the coming years, thanks to a large market opportunity.
"There's 55 million people who go to work every day in the U.S. in companies with under 500 full-time employees," he noted, while TriNet serves 231,000 employees a year, a total he says "is just too small to me."
While much of the focus in the IPO market is focused on the South Bay and San Francisco, the East Bay has had its own success recently, including another HR-focused company, Pleasanton cloud-software company Workday. TriNet's home base of San Leandro is a new addition to the IPO market, and Goldfield said the fresh infusion of cash won't lead the company to look for a more high-profile home.
"We started on a kitchen table in San Leandro, and we will never leave our roots there," he said Thursday.
Instead, the company could look for acquisitions that would move its business into new markets or add to its software-as-a-service platform, which is integrated tightly with mobile applications available to employees represented by TriNet.
TriNet is majority-owned by Palo Alto private equity firm General Atlantic, which did not sell any stock in the IPO, though the underwriting banks have access to an additional 2.25 million shares if desired, all of which would come from General Atlantic. Without selling those shares, the firm will own 55.7 percent of TriNet after the IPO; the second-largest stake belongs to founder and former CEO Martin Babinec, who still serves on the company's board of directors.
Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/jowens510.