By Liana B. Baker and Lauren Hirsch

(Reuters) - Okta Inc, a U.S. cloud identity management company valued at $1.2 billion in its latest private fundraising round, has hired Goldman Sachs Group to lead an initial public offering or outright sale, people familiar with the matter said.

Okta's exploration of both an IPO and a sale underscores the dilemma faced by several technology companies this year, as frothy stock market valuations of many of their peers begin to come down, prompting potential buyers to enter the fray.

Okta could file for an IPO as early as the second half of this year, the people said this week. However, the San Francisco-based company has also held talks with technology peers about being acquired, and could pursue a sale if it believes it can fetch a significantly higher valuation than in an IPO, the people added.

The sources asked not to be identified because the deliberations are confidential. An Okta spokeswoman would not comment on Goldman's role and the IPO plans, other than to say that no sale process was being considered. Goldman Sachs declined to comment.

The market for technology IPOs remains choppy. Software provider Twilio Inc priced its initial public offering on Wednesday at $15 a share, above its indicated range of $12-$14, according to a source, in only the third U.S. technology IPO of the year.

Meanwhile, acquisitions have been picking up. Earlier this month, technology security firm Symantec Corp said it would buy privately held cyber security company Blue Coat Systems Inc for $4.65 billion in a cash deal that will ramp up Symantec's enterprise security business.

Blue Coat had been planning for an IPO that it thought would value the company at roughly $3.8 billion, a source familiar with the IPO said, asking not to be named as the valuation was not public.

One of Okta's competitors in identity management, Denver-based Ping Identity Corp, was also sold earlier this month. The acquirer, private equity firm Vista Equity Partners Management LLC, valued Ping at more than $600 million, according to a source familiar with the deal, who asked not to be named because the figure is not public.

Okta helps companies organize passwords and authenticate the identity of employees who log into work applications made by other software firms. Its customers include satellite TV provider Dish Network Corp and hospitality company MGM Resorts International.

Okta has raised a total of roughly $230 million to date with investors such as Sequoia Capital, Andreessen Horowitz, Greylock Partners and Khosla Ventures, Janus Capital Group and Altimeter Capital.

(Reporting by Liana B. Baker in San Francisco and Lauren Hirsch in New York; Editing by Andrew Hay and Leslie Adler)