It's a Pivotal moment: Dell's cloudy soft limb hits the stock market

Still firmly in Big Mike's clutches despite IPO


Pivotal has set its initial public offering share price at $15, with hopes of raising $555m and an anticipated $14-$16 price band. The shares are expected to trade on the New York Stock Exchange from today.

Dell Technologies is expected to hold almost three-quarters of the stock and because there are two types of share – class A and B, with B having 10 times higher voting power than A – will also possess about 96 per cent of the voting power.

The long-awaited Pivotal IPO has an implied valuation of $3.8bn if it shifts 37 million shares at that price point.

The S-1 form it filed in March lifted a veil on Pivotal's annual revenues: showing $509m for FY 2017/18; $416m in 16/17; and $280.9m the year before. But the company also posted net losses for those years, of $163.5m, $232.9m and $282.7 respectively. It also noted that "as of February 2, 2018", it had an accumulated deficit of $1.14bn. That said, profits are at $281m for FY 2018 – up from $181.9m in '17 and $93.5m in 2016.

General Electric, an investor in Pivotal, is selling some of its holding, about 3.9 million shares, to raise $58m.

The cash raised will stay inside Pivotal and not be used to pay off Dell debt from its $67bn EMC acquisition, it told the SEC.

We do not intend to transfer any net proceeds we receive from this offering to Dell Technologies, Dell or their respective affiliates, other than payments in the ordinary course of business under one or more of the agreements described under "Certain Relationships and Related Party Transactions.

The major class A and B shareholders are Michael Dell, Dell Technologies, and EMC, each with 175,514,272 shares, and Silver Lake Partners Investment funds – which analysts are warning could hurt Pivotal's stock price if it decided to sell any – with 131,306,110 shares. VMware (44,108,262), a GE affiliate (15,532,075) and the Ford Motor Company (17,516,709) each own more than 5 per cent of the shares.

The Reg is hearing from execs that the tech IPO pipeline is full to the brim, and more are expected later this year. ®


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