Adds details on rivals, shares
Aug 5 (Reuters) - Shares of cloud services firm Rackspace Technology Inc RXT.O plunged 19% after making their Nasdaq debut on Wednesday, as the company owned by Apollo Global Management sold shares to investors in its $703.5 million initial public offering.
The stock was trading at $17.00 on Wednesday, compared with its IPO price of $21.00 per share.
The lacklustre IPO and debut bucked the recent trend of strong appetite from investors for cloud computing companies as the novel coronavirus outbreak drives more businesses to operate digitally and rely on cloud computing for more of their workflow.
Rackspace, which leases server space and helps corporations store and access data in the cloud, sold 33.5 million shares at the bottom end of its target range of $21.00 to $24.00 per share, valuing the company at $4.18 billion, excluding debt.
Cloud companies such as Ncino Inc NCNO.O and Kingsoft Cloud Holdings Ltd KC.O have seen their share prices more than double since going public earlier this year.
Rackspace had been exploring an IPO for the last two years, but its weak organic growth and large debt due to its $4.3 billion leveraged buyout by Apollo in 2016 and subsequent acquisitions had stopped it from pursuing an IPO earlier.
Goldman Sachs, Citigroup and J.P. Morgan were the lead underwriters for the IPO.
(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Amy Caren Daniel)
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