Interxion's IPO: Top-of-Range Pricing and Shares Up

Jan.31.11 | About: InterXion Holding (INXN)

European data center provider Interxion (NYSE:INXN) had a successful debut on Friday as its shares gained about 6 percent in the first day of trading, closing at $13.80. During the day, the shares opened trading at $14.55 and reached $15.30 before slipping back.

Interxion had successfully priced its shares at the top of its forecasted range ($11-13), and succeeded in increasing the number of shares sold to 20.37 million instead of 18.6 million, as originally planned. The additional shares were all offered by existing shareholders, and the company will not get any proceedings from the sale. The underwriters have a 30-day option to purchase from certain selling shareholders up to an additional 3,056,287 ordinary shares.

The company benefited from next to perfect timing: On January 27, Verizon Communications (NYSE:VZ) announced its intention to acquire Terremark (NASDAQ:TMRK), offering $19 in cash, a premium of 35 percent per share over that day's closing price. Multiples used in the transaction were quite high, and the whole data center and “cloud” related sector benefited in the following trading days:

Here’s a look at other gainers in the data center and cloud computing sector:

  • Savvis (NASDAQ:SVVS) was up $4.29 to $30.86, a gain of 16 percent.
  • Internap (NASDAQ:INAP) surged 62 cents to $7.59, about 9 percent higher.
  • Rackspace (NYSE:RAX) gained $1.59 to $33.80, up 5 percent.
  • Equinix (NASDAQ:EQIX) was up $1.16 to $88.84, a gain of 1.5 percent.

It's also interesting to note that the exchange rate between the euro and U.S. dollar was about 1.30 at the time of Interxion's original registration statement with the SEC, while it is now about 1.36, a four percent increase that might have also helped make the offering look more interesting.

Here (subscription required) is a comment about InterXion's debut on the NYSE by the Financial Times:

Co-location has become one of the hottest businesses in the world of trading as technology sweeps away old style trading practices, reinventing what it means to be an “exchange." That has put data centre operators in arguably the sweetest spot of market structures.

Perhaps we should not be surprised why Interxion decided to list in New York. Its key shareholders are Americans, as is its chief executive. Nevertheless it is a blow to Europe and London in particular. The region encompasses all of Interxion’s business while the UK capital is home to one of its most important data centres and its closest peer, Telecity.

As a reminder, I recently covered Interxion's floating in a two-part article. The first part examines the offering itself, and the competitive landscape for co-location in Europe. The second part examines in greater detail the company’s financials.

Disclosure: I am long EQIX.