Pivotal Software Inc. | $PVTL Stock | Company Looking To Raise Over $500 Million In IPO

Pivotal Software

Pivotal Software Inc. (NYSE: PVTL)


Pivotal Software Inc. has announced that it expects to raise not less than $592 million through its IPO of 37 million Class A shares. The firm, which is an affiliate of Dell Technologies Inc., says its initial public offering will be priced at between $14 and $16 a share.

The company filed for an IPO last month, and plans to be listed under the ticker symbol “PVTL” in the New York Stock Exchange (NYSE). However, the date of the offering is yet to be disclosed.

Dell, the biggest privately held tech firm in the world, is the majority stakeholder of Pivotal Software. In recent years, Dell has had to deal with so much pressure to improve its earnings levels after its $67 billion EMC Corp acquisition that plunged it into debts.

Increasing competition has also affected the company negatively as it tries to meet its financial targets. According to a news article published on the Reuters website, Dell had previously considered to sell Pivotal Software before settling on an IPO.

Pivotal Software assists software developers in streamlining the process of revolutionizing cloud applications. It achieves its processes through its relationships with VMware and Dell. The company posted a net loss of $163.4 million in latest financial year, compared to a loss of over $232.8 million in the previous financial year.

Revenue stood at $509.4 million for the latest financial year, versus $416.2 million in the previous year. The total number of employees working for the company currently stands at 2,518.

The tech firm will offer Class A shares to investors, each carrying a single vote. VMware and Dell will hold all Class B shares, each carrying ten votes. The filing thus gives Dell the “boss” status in the stock, and can therefore choose to ignore the wishes of shareholders at any time.

Pivotal Software derives its earnings from services and subscriptions. The firm has already made revenues of more than $250 million through annual subscriptions of its Pivotal Cloud Foundry, which boasts more than 300 customers.  Pivotal Software also runs a consulting business called “Labs”, which is also doing well. According to the company, a majority of customers that engage in ‘Labs” later tend to subscribe to Cloud Foundry.

The IPO’s lead book-running managers are Citigroup, Goldman Sachs & Co. LLC and Morgan Stanley. The book-running managers include Well Fargo Securities, BofA Merrill Lynch, UBS Investment Bank, Barclays, RBC Capital Markets and Credit Suisse. On the other hand, Mischler Financial Group, Inc., KeyBanc Capital Markets, Siebert Cisneros Shank & Co., L.L.C. and L.P., The Williams Capital Group, William Blair, Ramirez & Co., Inc., are acting as the co-managers.