Cloud services provider, Rackspace Technology, has reportedly announced the sale of its initial public offering (IPO) shares at the rate of $21 per share, as the bottom end of its target range, for raising a sum of $703.5 million. Excluding debt, the IPO valued the Apollo Global Management-owned Rackspace Technology at $4.18 billion. The company had planned to proceed with the sale of its 33.5 million shares within the target price range of $21-$24 per share.
Rackspace had a revenue of $2.44 billion in 2019 with a net loss of around $102.3 million. For the last two years, the company had been in search of an IPO. However, its large debt and weak organic growth had been preventing the company from pursuing it.
For the uninitiated, Rackspace Technology, Inc., is an American cloud computing corporation based in Texas, USA. The company is renowned for leasing server space, and helping corporations to access and store data in the cloud. Rackspace has recently expanded its operations to include multicloud services, state sources.
The company has also established its operations in Austin, Texas, and Blacksburg, Virginia, as well as in Switzerland, Australia, the United Kingdom, the Netherlands, Singapore, Germany, Hong Kong, and Mexico. Subsidiaries of Rackspace Technology comprise Slicehost, RSUS1 LLC, Rackspace Headquarters LLC, Datapipe, ObjectRocket, and others.
As per sources, the company’s IPO is a stimulation to the strong appetite from investors for cloud computing companies as the COVID-19 pandemic has caused more enterprises to operate on a digital basis and rely on cloud computing for major part of their workflow. Other cloud companies including Kingsoft Cloud Holdings Ltd and Ncino Inc have reportedly witnessed their share prices to have doubled since going public earlier this year.
The underwriters for Rackspace’s IPO comprise J.P. Morgan Securities LLC, Goldman Sachs & Co, and Citigroup Global Markets.