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Like a phoenix rising from the smouldering ruins of its data centre, OVH sets sights on IPO

Tells market not to worry – insurers will pay $58m to 'cover the consequences of the fire'

OVH Groupe SAS is edging closer to a potential initial public offering (IPO) expected to value the European hosting and cloud biz at around $4.7bn – months after a fire engulfed part of its data centre real estate.

The privately owned company, which trades as OVH Cloud, today issued a letter and series of documents confirming it is "contemplating" an IPO on Euronext Paris with the intent to "raise up to €400m through the issuance of new shares."

As part of the move, existing shareholders that have "supported the business" since 2016 – namely private equity investors KKR and Towerbrook, which own 10 per cent of the shareholding each – intend to sell some of the stock. Back then, OVH Cloud was valued at £1bn.

The proceeds of the IPO will be used to fund expansion into new services – including HPC for AI and machine learning, database management solutions, integrated IaaS and SaaS. OVH also wants to beef up its client base in core markets, expanding in the Americas and Asia, bulk out European leadership, and potentially dip its toe in mergers and acquisitions.

The market for cloud services is dominated by the big three: AWS, Microsoft and Google accounted for $6 in every $10 spent by customers globally on public cloud infrastructure in Q2.

OVH claims it is the fifth largest cloud provider in Europe and has frequently talked up the demand for data sovereignty by European clients, a regulatory concern for some.

The pandemic has been kind to the biggest purveyors of cloud, with digital transformation projects accelerated as businesses found their existing tech infrastructure insufficiently agile to meet the demands of remote users during lockdown.

OVH Cloud, which says it employs 2,400 staff and operates 33 data centres hosting 400,000 servers across four continents, reported 20 per cent compound annual growth rates in revenues from 2010 to 2020 when it turned over €632m in sales and made EBITDA of €263m, excluding share-based compensation and expenses from payment of earnouts.

One other financial aspect mentioned in today's document is the commitment OVH received from insurers to pay $58m to "cover the consequences of the fire" at its data centre in Strasbourg, France, in March.

The blaze took out SBG2 data centre, OVH was forced to write off SBG1, and the blaze hit service in other bit barns on site. The suspected cause was a UPS refresh a day before the fire broke out, but a full report on the investigation is not expected to be made public for some time.

Some clients lost data due to the incident and OVH has put in place measures to prevent a similar mishap from taking place, including a lab to model the impact of fires on data centres.

Following the IPO, founder Octave Klaba and his family are expected to remain majority shareholders, the company said. ®

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