San Francisco (FT) Fitbit clinched a valuation of more than $4bn after it successfully sold shares in an initial public offering that tested investor appetite as competition in the wearable device market ratchets up.The company and selling stockholders raised $732m in the flotation, valuing Fitbit at $4.1bn, after the number of shares on offer and the price range were increased for a second time as demand for the IPO mounted, according to two people familiar with the deal.Fitbit, along with early-stage investors, sold 36.6m shares at $20 apiece, or a third more than the midpoint of the original price range.

Underwriters led by Morgan Stanley, Deutsche Bank and Bank of America Merrill Lynch have the opportunity to purchase roughly 5.5m additional shares if demand warrants it, which could swell the offering size to $841m.

The fresh capital boosts Fitbit at a time when interest in wearable devices has surged, and as Apple and Google launch new smartwatches.

Fitbit said it planned to use the proceeds from the IPO to increase its financial flexibility, and for research and development. It could use some of the cash to acquire a complementary business or technology, it added.

Fitbit provides public investors with the only direct way to tap growing demand for fitness trackers. The IPO follows the successful stock market debut of GoPro, another consumer electronics company, last year.

The pitch to investors has rested on the San Francisco-based company’s profitability and brisk pace of growth. Revenues in the past year soared 175 per cent to $745.4m, as Fitbit sold more than 10.9m devices — nearly 8 times as many as in 2012.

As part of its roadshow, chief executive James Park also outlined broader trends for accessing personal information via mobile devices and the growth of cheaper sensors for measuring health and activity as part of other devices.
Executives said the eight-year-old company, a pioneer in the connected health and fitness market, was now moving into higher-priced categories for devices such as GPS-tracking watches for runners.

However, it faces competition from cheaper devices, such as Chinese electronics maker Xiaomi’s Mi Band, as well as the pricier Apple Watch which Apple aims to style more closely to jewellery.

Fitbit swung to a net profit after at least four years of losses, reporting net income of $131.8m in 2014. Its gross margins rival even Apple’s, increasing from 35 per cent to 50 per cent between 2012 and 2014. In the first quarter of the current year, Fitbit reported a profit of $48m.

While Fitbit and GoPro make most of their money from selling devices, they have attempted to emphasise to investors the potential of software and other services.

Fitbit hopes to tap into growing investment by companies in workplace health through the inclusion of fitness trackers in corporate wellness programmes.

The share offering comes in what has been the quietest start to a year for new US listings since 2010. More than 80 companies have gone public this year, raising a combined $15.4bn, according to data provider Dealogic.

Technology offerings have dramatically cooled, with just 11 companies raising $2.9bn this year, against the $9bn raised at the same point in 2014. Companies in the sector have instead turned to private offerings to raise cash without attracting public scrutiny.

Fitbit shares will trade on the New York Stock Exchange on Thursday under the symbol ‘FIT’.