Rackspace plans IPO after going private in 2016

Cloud services provider signals return to public market with second IPO in 12 years.

Anne Morris, Contributing Editor, Light Reading

July 13, 2020

2 Min Read
Rackspace plans IPO after going private in 2016

Rackspace confirmed previous rumors that it is planning to go public again, just four years after closing a deal to become a private company and 12 years after its previous initial public listing.

The US-based company, which leases server space and helps corporations store and access data in the cloud, announced Friday that it had filed a proposed IPO with the Securities and Exchange Commission. It didn't specify how much it aims to raise, only listing the $100 million placeholder figure. It plans to list on Nasdaq under the symbol RXT.

In 2016, Rackspace went private in a $4.3 billion deal with investors led by funds affiliated with Apollo Global Management in order to gain freedom to execute on a long-term strategy. It first went public in 2008.

Reuters had already reported in April that Apollo was preparing to take Rackspace public in an IPO that could value the company at more than $10 billion, including debt. According to the news agency, the company had been exploring an IPO for the last two years, but was hampered by weak growth and debt following the Apollo buyout and subsequent acquisitions.

It seems that Rackspace is now hoping to benefit from the recent focus on remote working and reliance on cloud computing as a consequence of lockdowns during the COVID-19 pandemic. Reuters reported that Apollo has been "emboldened" by the rally in the shares of Rackspace peers such as Fastly and Datadog in recent weeks.

For the year ended December 31, 2019, Rackspace reported revenue of $2.4 billion and a net loss of $102.3 million. For the quarter to March 31, 2020, it reported revenue of $652.7 million and a net loss of $48.2 million. At the end of March, outstanding debt stood at $3.98 billion, of which just over $3 billion was attributable to the Rackspace acquisition in 2016.

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— Anne Morris, contributing editor, Light Reading

About the Author(s)

Anne Morris

Contributing Editor, Light Reading

Anne Morris is a freelance journalist, editor and translator. She has been working in the telecommunications sector since 1996, when she joined the London-based team of Communications Week International as copy editor. Over the years she held the editor position at Total Telecom Online and Total Tele-com Magazine, eventually leaving to go freelance in 2010. Now living in France, she writes for a number of titles and also provides research work for analyst companies.

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