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Dell-owned Pivotal files for IPO

Dell-owned cloud app software firm Pivotal has is to go public.

The San Francisco, California-based company, whose technology helps software developers modernise their apps for the cloud, was spun out of storage specialist EMC.  

Dell Technologies, EMC, and Michael Dell currently own 80.8 per cent of Pivotal today, which had revenues of $509 million (£357m) in its latest fiscal year to the end of February, up from $416 million (£292m) in fiscal 2017.

However, the company has only posted net losses in recent years, albeit at a declining rate. In fiscal 2016, it racked up a net loss of $282.7 million, falling to $232.9 million in fiscal 2017 and $163.5 million in its most recent financial year. 

Morgan Stanley, Goldman Sachs and Citigroup are among the underwriters of the IPO. 

The news comes only a month after speculation that Dell itself could go public again after just four years as a private company and only several weeks after reports emerged that the computer giant is planning to raise an IPO through a reverse-merger with VMware.

According to “people familiar with the matter”, CNBC suggested that the $60bn (£42.1bn) virtualisation software company, which is controlled by Dell, would actually buy the larger company, allowing Dell to be traded publicly again without going through the expense and trouble of a formal IPO. 

Such a move would enable the private equity investors who backed Dell’s move to go private in 2013 a way to cash out, while helping Dell pay down some of its estimated $50 billion debt.

While sources say Dell could still pursue a more traditional IPO, a reverse merger would enable the company to avoid the expense and scrutiny of that process. 

However, the sources added that Dell hasn’t yet decided on a strategic option and is also considering several alternatives, including other acquisitions or buying the remaining stake of VMware that it doesn’t already own.

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