Cloud solutions firm Rackspace Technology sold shares in its IPO on Tuesday at $21 per share, the lowest end of its target range, to raise $703.5 million, the company said.
The IPO valued the Texas-based Rackspace, which is owned by private equity firm Apollo Global Management, at some $4.18 billion, excluding debt.
The organisation had aimed to sell 33.5 million shares at a target cost range of $21-$24 per share.
The IPO bucks the current trend of powerful appetite as the novel coronavirus outbreak drives companies to operate and rely on cloud computing to get more of their efficiencies.
Other cloud companies such as Ncino and Kingsoft Cloud Holdings have seen their share prices more than twice since going public earlier this season.
Rackspace helps corporations store and access data in the cloud and in recent years has expanded its business to include services and has leased server space.
In 2019, Rackspace reported revenue of $2.44 billion and a net loss of $102.3 million.
The company had been exploring the IPO for the previous two decades, but its weak organic expansion and large debt, accumulated due to its $4.3 billion leveraged buyout by Apollo in 2016 and subsequent acquisitions, had stopped it from chasing it.
Shares in Rackspace, that was publicly recorded before being purchased by Apollo, are expected to start trading on the Nasdaq on Wednesday under the symbol “RXT.”
Goldman Sachs & Co, Citigroup Global Markets and JP Morgan Securities are among the underwriters for the IPO.
The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our content partners at Thomson Reuters. Reporting by Joshua Franklin in Boston and Greg Roumeliotis in New York. Editing by Jonathan Oatis, Aurora Ellis and Himani Sarkar.
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