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Rackspace IPO Rumors: Will Cloud MSP Proceed With Initial Public Offering?


Rackspace, backed by private equity firm Apollo Global Management, is preparing for an IPO (initial public offering) that could value the cloud MSP at more than $10 billion, including debt, Reuters reports.

At first glance, it's unclear if or how the current coronavirus pandemic and related U.S. economic shutdown will impact Rackspace's plans. But take a closer look, and Rackspace appears upbeat about the continued shift toward cloud and managed services amid the pandemic.

Amid the work from home (WFH) wave, businesses continue to shift IT workloads toward Amazon Web Services (AWS), Microsoft Azure and Google Cloud Platform (GCP). Rackspace ranks among the Top 200 Public Cloud MSPs, according to ChannelE2E research, and the MSP supports each of those platforms.

Rumored Rackspace IPO Filing Follows Business Evolution

Rackspace has confidentially filed for an IPO with the U.S. Securities and Exchange Commission and is planning to proceed with a stock market debut as soon as the volatility that has been fueled by the pandemic subsides, Reuters reports.

Similar rumors about a Rackspace IPO surfaced in 2018. The background: Apollo Global Management acquired Rackspace for $4.3 billion and took the company private in 2016. At the time, the hosting provider was pivoting from traditional public cloud services toward managed cloud services for third-party platforms like AWS, Microsoft and GCP.

The Rackspace business transformation has featured multiple acquisitions -- including Salesforce partner RelationEdge and Datapipe. Also, Rackspace has pushed hard into managed security services.

Potential MSP Technology Company IPOs: Watching Datto, Kaseya

Meanwhile, it's unclear if or how the pandemic will impact potential IPOs in the MSP-centric technology sector. Datto and Kaseya had been exploring potential IPOs for the first half and second half of 2020, respectively, sources tell ChannelE2E. But ChannelE2E does not know if those plans have shifted amid the pandemic.

The overall MSP technology sector remains under intense pressure, though it's expected to hold up better than the broader U.S. economy. The managed services market will likely decline 17 percent in Q2 2020, before rebounding in the second half of 2020, according to the ISG Index research report.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.