Open-source enterprise software company SUSE Group gears up for a first public offering in Europe this summer as it seeks new backers in an attempt to meet its ambitious revenue targets.
The IPO, which has been in the works for some time, could be worth as much as 7 to 8 billion euros (8.3 to 9.5 billion dollars), sources told Reuters on Wednesday.
SUSE, based in Germany, is the maker of a popular enterprise Linux distribution of the same name. The open source SUSE Linux platform runs in enterprise public cloud deployments, on-premises data centers, and at the edge of the network. SUSE also offers a range of software products higher up the stack.
The company is currently owned by Swedish private equity firm EQT Partners, which has carefully planned the IPO since late 2020, Reuters said. Before being engulfed by EQT, SUSE had spread quite a bit. The company, founded in 1992, was acquired by a software and services company called Novell Inc. in 2004, which in turn was acquired by Attachmate Corp. in 2010.
Then, in 2014, it was Attachmate’s turn to be acquired by the British information technology giant Micro Focus International plc. Finally, Micro Focus sold SUSE to EQT for around $ 2.5 billion in March 2019.
SUSE has continued to develop its business since this final acquisition. Its third quarter revenue, released in September 2020, increased 14% from the previous year. In addition, the value of its annual cloud contract flourished, growing 81%, marking the 14th consecutive quarter in which its cloud LCA increased.
In addition, the company has seen its customer offerings worth more than $ 1 million per year increase by 35%. It also saw a 50% increase in ACV reservations for its main SUSE Linux Enterprise Server offering for SAP applications.
SUSE’s strong growth prompted it to set a very ambitious revenue target. In May 2020, SUSE chief executive Melissa Di Donato (pictured) told SiliconANGLE Media’s CUBE (below) that the company aims to double its sales by 2023, from around half a billion from dollars to $ 1 billion.
In order to achieve this noble goal, SUSE has undertaken to expand its activities. In December, it made a key acquisition, buying a Kubernetes management startup called Rancher Labs Inc. SUSE said at the time that it wanted to strengthen its container management capabilities to better challenge one of its oldest. rivals in the enterprise software market, Red Hat. Inc.
SUSE’s decision to go public via an IPO flies in the face of the trend to merge with Special Purpose Acquisition Companies, or SPACs, which have become a more popular avenue in the markets in recent months. public by technology companies based in the United States.
Most likely, SUSE’s choice simply reflects the fact that PSPCs haven’t been as popular in Europe as in the United States, analyst Charles King of Pund-IT Inc. told SiliconANGLE. said SUSE was undoubtedly aware of the risk of being rejected, as has happened with some recent tech IPOs.
“Despite the risk, the acquisition of Rancher Labs and the resulting expansion of its container and cloud solutions have placed SUSE in a better position to thrive as an independent company in markets where container technology and Kubernetes have largely replaced discussions of traditional operating systems and virtualization platforms. “, said the king.” If the IPO of SUSE can reach the estimated valuation of 7 to 8 billion euros announced, it will be a huge gain for EQT.
Holger Mueller, analyst at Constellation Research Inc., told SiliconANGLE he thinks it is refreshing to see a company go public the traditional way through an IPO. “SUSE is reorganizing itself as a container company using the assets of Rancher Labs and it’s a very fast growing market right now,” Mueller said.
Reuters said SUSE’s IPO is likely to take place in May and that Bank of America and Morgan Stanley will execute the deal with help from Goldman Sachs, Deutsche Bank and Jefferies.