Zayo Hitting Wall Street With Planned IPO

Dark fiber provider Zayo is hitting Wall Street.

The company, a longtime player in the channel, said on Thursday it has filed plans for its initial public offering.

The move comes as Zayo has spent the last several years growing through acquisition, in several of its specialty areas. Indeed, besides fiber, Zayo offers wavelengths, SONET, Ethernet, IP services, and carrier-neutral colocation and interconnection. Its most recent purchases include AtlantaNAP Data Center, Paris-based Neo Telecoms and London-headquartered Geo Networks.

The firm also recently amended its credit agreement and reported fiscal third-quarter earnings of 6 percent revenue growth (reaching $278 million) over the previous year, alongside net losses of $43.7 million – $25.2 million more than the same period a year earlier. In the first three months of 2014, Zayo spent almost $91 million on the addition of 335 route miles and bringing 294 buildings online.

That it’s decided to go public comes as little surprise. Zayo has spent its first seven years as a private company, giving investors plenty of time to push for an exit strategy that gives them a return on their investment. Further, the appetite and environment for a fiber IPO seems healthy. Unlike the late 1990s, which featured a fiber glut that contributed to the dot-com bust, demand for high-bandwidth connectivity is soaring. Services including video, mobility and the cloud are driving businesses – Zayo’s core customer base – to buy big, fast pipes and store critical information in offsite data centers.

Zayo’s intended IPO also accompanies what Renaissance Capital says is the busiest go-public atmosphere since 2000.

Meantime, Zayo did not say how many shares it will offer in its IPO, or at what price. Morgan Stanley, Barclays, and Goldman, Sachs & Co. are acting as the active joint book-running managers for the offering.

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