Blavatnik-Backed DigitalOcean Sinks After $775 Million IPO

Cloud computing company DigitalOcean Holdings Inc. fell 9.6% in its trading debut after raising more than $775 million in an initial public offering priced at the top of a marketed range.

DigitalOcean’s shares, which sold for $47 each in the IPO, closed Wednesday at $42.50, giving the company a market value of $4.48 billion. The New York-based company on Tuesday sold 16.5 million shares, which it had marketed for $44 to $47.

The company’s largest stockholder, with a 22% stake after the offering, is an affiliate of Len Blavatnik’s Access Industries Holdings LLC, according to the filings with the U.S. Securities and Exchange Commission. Other backers include funds connected to venture capital firms Andreessen Horowitz and IA Venture Partners.

Blavatnik-Backed DigitalOcean Sinks After $775 Million IPO

Globally, 46 software companies have raised a combined $15.6 billion in IPOs since Jan. 1, according to data compiled by Bloomberg. That includes 14 listings raising $9.84 billion on U.S. exchanges, led by Playtika Holding Corp.’s $2.16 billion IPO and Qualtrics International Inc.’s $1.78 billion share sale, the data show.

DigitalOcean Chief Executive Officer Yancey Spruill said the virtual roadshow -- a staple of the past year because of the coronavirus pandemic -- was less stressful than in-person marketing of the IPO.

Roadshow ‘Marathon’

“A traditional roadshow is like running a marathon,” Spruill said. “We ended up having higher-quality meetings. It’s fascinating that so much capital could be allocated by so many and nobody meets in person, which is breaking conventional wisdom from a year ago.”

DigitalOcean said in its filings that it has 570,000 individual and business customers in 185 countries who use its platform to build, deploy and scale software applications.

The company’s revenue has grown over the past three years while losses have held relatively steady, according to its filings. DigitalOcean had a net loss of $44 million on revenue of $318 million last year, compared with a loss of $40 million on revenue of $255 million in 2019.

The offering was led by Morgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co. The shares are trading on the New York Stock Exchange under the symbol DOCN.

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