Pivotal Software Files For IPO; Dell To Maintain Controlling Interest

Fast-growing Dell Technologies-backed Pivotal Software, which is grabbing share in the cloud platform-as-a-service applications market, filed for an initial public offering with the Securities and Exchange Commission on Friday.

Pivotal posted a net loss of $163 million on a 23 percent increase in sales of $509 million for its fiscal year 2018, ending Feb. 2, 2018. The company did not provide an initial price per share in its S-1 filing.

Dell is currently Pivotal's majority stockholder. Other major Pivotal shareholders include Microsoft, Ford and GE. Once Pivotal goes public, Dell Technologies will own, indirectly through its subsidiaries -- including VMware -- 351,028,548 shares of outstanding Class B common stock.

[Related: Michael Dell On Software-Defined Upstaging Public Cloud, 'Increasingly Integrating' Dell's Full Portfolio, and Channel Sales Momentum]

"As a result, Dell Technologies will be able to exercise control over all matters requiring approval by our stockholders, including the election of our directors and approval of significant corporate transactions. Dell Technologies' controlling interest may discourage or prevent a change in control of our company that other holders of our common stock may favor," said Pivotal in the filing.

The public offering comes on the heels of Dell Technologies considering strategic options that include going public or merging with its subsidiary VMware. Dell CEO Michael Dell said earlier this year his Round Rock, Texas-based company is evaluating the two "potential business opportunities" with the desire to grow the company "even faster and thrive in the very dynamic IT marketplace."

"This is one of Dell Technologies' most highly prized technology assets," said Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, a Dell EMC Titanium partner. "Pivotal is aimed at taking advantage of the ever-growing cloud opportunities whether they be hybrid, on-premises or native public cloud. The majority of the Fortune 500 are utilizing Pivotal to build cloud applications in some fashion."

Venero said he sees the Pivotal IPO as a major move by Michael Dell to leverage all of his assets to drive cost advantages for partners and customers. "If Michael is doing this there is obviously a good financial and structural reason for him to do it," said Venero. "The one thing we have learned from past success is to trust Michael's instincts around these types of big technology bets. It is going to be very interesting to see what kind of appetite there is for the Pivotal IPO."