Unique: Apollo readies IPO of cloud firm Rackspace – sources


NEW YORK (Reuters) – Non-public fairness agency Apollo World Administration Inc has registered Rackspace Holding Inc for an preliminary public providing (IPO) that would worth the cloud providers agency at greater than $10 billion, together with debt, individuals accustomed to the matter mentioned.

Apollo has been emboldened by the rally within the shares of Rackspace friends reminiscent of Fastly Inc and Datadog Inc in current weeks, the sources mentioned, because the novel coronavirus outbreak drives extra companies to function digitally and depend on cloud computing for extra of their workflow.

Rackspace has confidentially filed for an IPO with the U.S. Securities and Trade Fee and is planning to proceed with a inventory market debut as quickly because the volatility that has been fueled by the pandemic subsides, the sources mentioned.

The sources cautioned {that a} date for Rackspace’s IPO had not but been set and requested to not be recognized as a result of the preparations are confidential. Apollo declined to remark, whereas Rackspace didn’t instantly reply to a request for remark.

U.S. listings have come to a near-standstill within the final two months on account of coronavirus outbreak-induced inventory market swings, which have made it more durable to cost shares in an IPO and have dampened the valuation that many firms can attain.

There have been solely two IPOs in the US in March, in contrast with seven a 12 months in the past, in accordance information supplier IPO Boutique. To date in April, there have additionally solely been two new listings. Some 14 firms went public in April 2019.

Rackspace leases server house and helps firms retailer and entry information within the cloud. The San Antonio-based firm had been exploring an IPO for the final two years, however its weak natural progress and huge debt pile, accrued because of its $4.three leveraged buyout by Apollo in 2016 and subsequent acquisitions, had stopped it from pursuing it.

The push by firms to have staff work remotely and make extra of their operations “pandemic-proof” has breathed new life into Rackspace’s enterprise and introduced an IPO inside attain, in keeping with the sources.

The worldwide cloud providers market generated $264.eight billion in income final 12 months and was estimated to exceed $900 billion by 2027, in keeping with Allied Market Analysis.

Reporting by Joshua Franklin and Greg Roumeliotis in New York; enhancing by Jonathan Oatis


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