Cloud Hosting Company Rackspace Technology Launches IPO

Rackspace Technology, a global provider of cloud hosting solutions, has launched its initial public offering (IPO) of 33,500,000 shares of its common stock. The initial public offering price is expected to be between $21.00 and $24.00 per share.

Cloud hosting provider Rackspace went private in 2016 after accepting a $32 per share offer from Apollo Global Management’ which equated to $4.3 billion. Now, Rackspace once again is focusing on the public markets to raise capital. The company initially went public in 2008, so, around 12 years ago.

Rackspace Technology has applied for listing its common stock on the Nasdaq Global Select Market under the ticker symbol ‘RXT.’

In addition, the cloud hosting company expects to grant to the underwriters a 30-day option to purchase up to an additional 5,025,000 shares of common stock at the initial public offering price, less underwriting discounts and commissions. Rackspace Technology’s existing stockholders will not sell any shares in the offering.

$703.5 million to $804.0 Million

Rackspace Technology expects to receive gross proceeds of approximately $703.5 million to $804.0 million from the IPO, before deducting underwriting discounts and commissions and other offering expenses, or $809.0 million to $924.6 million if the underwriters exercise their over-allotment option in full.

The cloud hosting provider intends to use a portion of the net proceeds from the offering to redeem, retire or repurchase $600 million aggregate principal amount of its outstanding 8.625% Senior Notes due 2024 and to pay related premiums, fees and expenses. The remainder of the net proceeds will be used for general corporate purposes.

Goldman Sachs & Co. LLC, Citigroup Global Markets Inc. and J.P. Morgan Securities LLC are serving as joint lead book-running managers and as representatives of the underwriters for the offering. RBC Capital Markets, LLC and Evercore Group L.L.C. are also serving as book-running managers for the offering.

Barclays Capital Inc., BMO Capital Markets Corp., Credit Suisse Securities (USA) LLC, Deutsche Bank Securities Inc. and HSBC Securities (USA) Inc. are serving as bookrunners for the offering. LionTree Advisors LLC, Siebert Williams Shank & Co., LLC, Drexel Hamilton, LLC and Apollo Global Securities, LLC are serving as co-managers for the offering. The offering will be made only by means of a prospectus.

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