Pivotal Software, the US-based software development services provider spun out by virtualisation technology provider EMC prior to its acquisition by computing equipment maker Dell, priced a $555m initial public offering today.
The company priced 37 million shares at $15 each, the middle of the IPO range. It is issuing 33.1 million shares which will raise approximately $497m, while industrial manufacturing conglomerate General Electric (GE) will sell almost 3.9 million shares for a total of $58.2m.
Pivotal has created a cloud-native software platform known as Pivotal Cloud Foundry that it combines with specialised tools and expertise from its Pivotal Labs division to help enterprise customers more easily build and run their own cloud applications.
The company made a $163m net loss in the year leading up to February 2018 from $509m in revenue, $259m of which was from annual subscriptions.
EMC spun out Pivotal in 2013 with $104m of funding from GE, which took a 10% stake, and $400m of debt financing from EMC that was converted into equity as part of Pivotal’s next funding, a $653m round that closed in 2016.
GE invested $45.8m in the 2016 round while carmaker Ford provided $182m and EMC subsidiary VMware $20m.
Dell EMC owned 175 million shares in Pivotal pre-IPO, and its other notable shareholders are private equity firm Silver Lake (131 million), VMware (44.2 million), GE (19.4 million) and Ford (17.5 million).
Morgan Stanley, Goldman Sachs and Citigroup are lead book-running managers for the offering while BofA Merrill Lynch, Barclays, Credit Suisse, RBC Capital Markets, UBS Investment Bank and Wells Fargo Securities are book-running managers.
KeyBanc Capital Markets, William Blair, Mischler Financial Group, Ramirez & Co, Siebert Cisneros Shank and Williams Capital Group are co-managers for the offering. If the underwriters take up the option to buy a further 5.5 million shares it will close at about $638m.