Wholesale network operator Zayo went public Friday at $19 per share, and saw its price jump more than 20% by late morning, suggesting that investors weren't scared off, at least initially, by Zayo's massive debt load and its admission that it could be several years away from showing a profit.
Zayo Group Inc. (NYSE: ZAYO) may have picked the right day for its IPO, seeing its value rise Friday during a broad market rally that comes after a wild up-and-down week on Wall Street. As of 11 a.m. Eastern Time, the NYSE Composite was up more than 140 points, while the Dow Jones index ballooned more than 228, and the NASDAQ was up about 54. At that hour, Zayo was at $22.05, an increase of about 16% from the IPO price, after rising more than 20% in the previous hour.
After a seven-year acquisition binge that turned the Boulder, Colo., company into an international fiber network giant, Zayo announced IPO plans in July. Its filing revealed that the company had spent almost $4 billion on acquisitions and still carried almost $3 billion in debt, while posting a quarterly loss of more than $43 million in its most recent earnings report. (See Zayo Files for IPO and How Zayo Spent $3.7B on Acquisitions.)
Still, Zayo's identity as a debt-laden, acquisitive juggernaut might be just fine with investors who no doubt have their eyes set on the ongoing bandwidth explosion, and Zayo's potential to continue raking in revenue while living right at the center of it.
Zayo will be articulating its momentum and approach to the mobile backhaul market at Light Reading's Backhaul Strategies for Mobile Operators conference in New York City on October 29. Click here for more details.
— Dan O'Shea, Managing Editor, Light Reading