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Summary:

After a long dry spell, technology initial public offerings took a small step towards a comeback as Rackspace Hosting, a San Antonio, Texas-based company, announced its IPO. The company that will trade on the NYSE under the ticker RAX is selling about 15 million shares at […]

After a long dry spell, technology initial public offerings took a small step towards a comeback as Rackspace Hosting, a San Antonio, Texas-based company, announced its IPO. The company that will trade on the NYSE under the ticker RAX is selling about 15 million shares at $12.50 each, in the process raising about $187.5 million from the market. That would give the company a valuation of around $1.45 billion. Goldman Sachs, Credit Suisse and Merrill Lynch are joint bookrunners on this deal. The deal should come as a big win for local VC heavyweights Norwest Venture Partners and Sequoia Capital, too — they own 16.2 percent and 11.6 percent of RackSpace respectively.

The company had wanted to raise around $276 million (by selling up to 17 million shares at $16 a pop), but had to settle for a much lower valuation, one that is reflective of today’s tenuous economy. The fact that Rackspace has gotten out of the gate in the dog days of summer is a good sign for similar high-revenue, high-quality tech companies in the pipeline. In a previous article we noted that Rackspace was raising money to expand its hosting infrastructure, expand rapidly into the fast-growing cloud computing sector and to offer services for small- and medium-sized businesses.

Disclosure: Rackspace is an advertiser on the GigaOM Network.

  1. Way to go.

    I really wish we see more of these TECH IPO’s coming in and more money floating around tech.

    Cheers, Nag

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  2. [...] Links: 1. Rackspace.com 2. GigaOM addthis_url = [...]

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  3. This is a utility IPO, not a tech IPO. Calling it tech is like saying PG&E is a tech company. True in some sense, but still misleading.

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  4. [...] Hosting Inc, began trading common stock today under the symbol “RAX”. 15 million shares of common stock were initially priced by [...]

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  5. [...] and storage company based in San Antonio-Texas, has finally managed to get out of the gate and become public. The company is now traded on the NYSE under the RAX ticker and have sold 15 million shares to the [...]

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  6. This is amazing. I worked on the failed IPO attempt for Rackspace in 2000. Glad to see they finally got it out.

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  7. @Greg Isaacs. Yet another proof point that it takes around 7 years to make it to the finish line “of sorts” for a company. Not easy.

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  8. Talk of rackspace got me thinging of media temple alternatives and I came across this ditty.. while playing poker I managed to skim through most of it.. http://www.truth-or-consequences.com/rackspace_sucks/rackspace_sucks_mirror2.html

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  9. [...] Tech IPOs Return With Rackspace [...]

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