IPO FILING: Rackspace Inc. (RAX)
Rackspace, Inc. has submitted its IPO paperwork late Friday after the close. The filing shows a maximum aggregate offering of $400 million, although this number is for filing purposes only.
They have applied to trade on the New York Stock Exchange instead of the NASDAQ and it will trade under the ticker “RAX.” The underwriters are listed as Goldman Sachs, Credit Suisse, Merrill Lynch, and WR Hambrecht and Co., although you will want to look below for the IPO process as it is not a normal underwriting.
Rackspace provides hosting services through its delivery of websites, web-based IT systems, and computing. The company has a huge focus on customer service through their Fanatical Support services. In 2007, the company generated net revenues of $362 million and a net income of $$17.8 million. According to Tier1Research, the world hosting market has a projected annual growth rate of 26% and in 2010, hosting is expected to grow into a $24.4 billion market. Over the last five years, Rackspace has shown a 59% annual revenue growth rate. Rackspace has aggressive global expansion goals in place and believes its customer focused Fanatical Support, low capital cost strategy, and long term focus will help them reach this goal.
While WR Hambrecht is a secondary on the deal, this is actually going to be an auction-based IPO that will go through their system. Individual accounts can go through the underwriters to bid, but individuals with E*Trade accounts will also be able to bid for the IPO. Institutions will be able to bid via a hyperlink available at the http://www.rackspaceipo.com site.
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April 28, 2008