Business Insight Zone

The IPO market, in case you haven’t been following it, has been lousy lately. In the year-plus since the extravagant public debut of Blackstone’s shares “common units,” the only really big IPO has been that of Visa — which is hardly a fair bellwether for all the non-household-name companies that might be considering a public offering.

What we’re getting, instead, is a smattering of niche players with strong track records, along with a few obscure companies of the type that usually populate the bottom rungs of the IPO pecking order — but that usually escape media attention when there are bigger and better companies going public at the same time.

Enter Rackspace

The Web hosting company Rackspace — which is expected to go public any minute now — offers a case in point of the small but solid company that can debut even under the market’s current chilly conditions. The San Antonio-based company grew from about $140 million in revenue in 2005 to more than $360 million in 2007, and manafed to turn solid profits throughout that time. And while it may not be a household name, the company is well known to the enterprise IT directors who make up a big chunk of its client base.

Rackspace is coming forward with a small offering ($210 million), but its lead underwriter is Goldman Sachs. It will be interesting to see if hungry IPO investors will pounce on this offering, or remain more cautious as they have with many offerings lately.

Ending a drought

One point worth noting: the Rackspace IPO will break the historic dry spell in venture-capital-backed IPOs, which has been running since the first quarter of this year.

If you want to keep up with all the doings in the IPO market — including filings, pricings, and more — check out Hoover’s IPO Central anytime.

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UPDATE, Monday, August 11, lunchtime: Ehh, seems Rackspace isn’t exciting investors so much. It opened on Friday just a bit south of $10.00 per share — against an offer price of $12.50 — and from then to now it has traded between $10.00 and $11.50. So, nothing disastrous, but nothing to write home about, either.

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Related posts:

• The IPO market, such as it is.
• IPO prospects for 2008.
• Visa’s IPO: Into every howling stormfront of financial doom a ray of the purest sunshine must fall.
• The IPO market and the NetSuite IPO.
• Blackstone: I told you so.

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(Rackspace logo via Wikipedia.)

Category: IPOs