Rackspace Technology has kicked off its initial public offering on the Nasdaq market, with plans to raise up to USD 925 million. The initial offering of 33.5 million shares will be sold at a price of USD 21-24 per share, and the underwriters have an option to buy another 5.025 million shares within 30 days at the same price.
The proceeds will go all to the company, as Rackspace’s existing stockholders are not selling any shares in the offering. If the over-allotment option is exercised, the company will raise a gross amount of USD 924.6 million. Part of this will be used to pay off USD 600 million in senior notes maturing in 2024, and the remainder will go for general corporate purposes.
According to the prospectus, Rackspace posted a net loss of USD 102 million in 2019, on revenues down slightly to USD 2.44 billion. In the first quarter of this year, revenues were up 7.5 percent year-on-year to USD 652.7 million, while the net loss narrowed slightly to USD 42.8 million.
Apollo Management is its main shareholder, with a 78.3 percent stake, and other private equity groups hold another 34 percent of shares. Their stakes will be diluted slightly after the IPO, while almost 19 percent of shares will be free float.
