The public offering from the hosting company comes amid the unsettled US economy, but Rackspace believes a Google-like auction will pull in nine figures.
TechCrunch followed up its initial break of the pending IPO in noting the format of the offering:The underwriters are Goldman Sachs, Merrill Lynch, Credit Suisse, and WR Hambrecht & Co. (the leading proponent of such IPO pricing). Pricing through an auction is designed to make sure the company raises the most money possible instead of giving up a first-day pop to investors who are allocated shares by the investment banks doing the deal.The infusion of income should permit Rackspace to beef up the number and capacity of datacenters it can provide to clients. Their strategy likely contains elements of service offerings, based on its acquisition of Webmail.us (renamed as Mailtrust) and the deployment of a "hosting cloud" service called
Shares will still be allocated to such clients, but anyone who bids beforehand in the auction at or above the eventual IPO price will also get shares. All in all, it is a much more efficient way to price an IPO and more companies should do it.
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