Switch’s Planned $500M Offering Would Be Year’s Third-Largest Tech IPO

Rapidly growing data center provider Switch has priced its planned initial public offering. DCK reported the Las Vegas-based company’s IPO plans earlier this month.

Sold at the top end of its targeted price range -- $14 to $16 per share – the 3.25 million shares Switch plans to offer to the public would yield $500 million, according to documents the company filed with the US Securities and Exchange Commission Monday. Sold at midpoint of the range, the deal would value the company at $3.7 billion, Renaissance Capital estimated.

The offering on the New York Stock Exchange would be the year’s third-largest tech IPO, following Snap’s $3.9 billion float and Altice USA’s $2.2 billion offering, according to Bloomberg.

Switch is structuring the deal in a way that wouldn’t give stockholders other than the company’s management any voting power by splitting the stock into multiple categories. Founder, CEO, and chairman Rob Roy would retain ownership of all Class C common stock, which, at 10 votes per share, would give him 67.7 percent of voting power.

Class A and Class B common stock would command 1 vote per share. Class B stock will go to people and companies who own stakes in the company today, including its executive officers and directors and various investors, among them Intel Capital Corp., the chipmaker’s venture capital arm.

Related:DCK Investor Edge: The Unique Proposition of a Switch IPO

Switch’s Class A stock (3.25 million shares) would be traded on the stock market under the ticker symbol SWCH.

If the IPO is successful, Switch will be the seventh publicly traded US-based data center provider, joining Equinx, Digital Realty Trust, CoreSite, CyrusOne, QTS, and Iron Mountain. The list got shorter by one name earlier this month, when Digital Realty closed its blockbuster acquisition of DuPont Fabros Technology.

Switch currently has 800 customers, eBay being its largest one. The online marketplace and its affiliates accounted for 13 percent of Switch’s 2016 revenue, which was $318.4 million.

The company’s 2013 revenue was $166.8 million, meaning its compound annual growth rate has been 24 percent over the last three years.

Switch reported $31.4 million in net income for 2016 and $73.5 million in 2015. Its 2015 revenue was $265.9 million.