Sources: Presidio Is Eyeing IPO, Blockbuster Offering Would Be 'Momentous'
Presidio, the $3 billion-plus solution provider powerhouse that has grown more than 33 percent in the past four years in a market plagued by single-digit global IT spending, is eyeing a potential initial public offering, sources told CRN.
Apollo Global Management Group, the private equity giant that acquired the fast-growing Presidio just 18 months ago, is interviewing bankers in anticipation of the offering, sources said.
Apollo did not respond to a request for comment. Presidio, which is one of the top Cisco, EMC and VMware solution providers and has won numerous awards from those vendors, also declined to comment.
How Presidio pivoted to managed services and found new customers.
"It has been a long, long time since a channel company went public," said Martin Wolf, president of martinwolf M&A Advisors of Walnut Creek, Calif., one of the top channel investment advisory deal makers. "This would be a momentous event – a big offering of a very valuable entity."
The Wall Street Journal was the first to report last month that Apollo was weighing an IPO bid for Presidio, No. 22 on the 2016 CRN Solution Provider 500.
Wolf credited Presidio CEO Bob Cagnazzi for driving impressive sales growth and consistently increasing the value of the company since taking the helm four and a half years ago.
"Cagnazzi has done a terrific job," said Wolf. "He has built a great business -- creating value long before Apollo bought the business. What he has done differently than others is that he has continued to drive above market rate growth, both organically and inorganically. You can not create long-term value without top-line revenue growth."
Cagnazzi has "consistently gained share in the IT services channel and he has done it profitably," said Wolf. "The biggest issue Bob has is he makes it look easy."
This is not the first time Presidio has explored the option of going public. In 2014, just a few months before being acquired by Apollo, Presidio reportedly hired Barclays and Credit Suisse Group AG to explore the company’s sale or IPO options.
A potential Presidio IPO is being explored even as market researcher IDC predicts a major slowdown in worldwide IT spending in 2016.
IDC has predicted IT spending of just 2 percent in constant currency this year, down from annual growth of 5 percent to 6 percent in constant currency over the pst six years since the financial meltdown of 2010.
Since taking over as CEO of Presidio, Cagnazzi has grown the company by more than 33 percent from $2.25 billion to more than $3 billion. Before Presidio, Cagnazzi was the CEO of BlueWater Communications Group, which was ranked as the fastest-growing solution provider on CRN's Fast Growth list in 2009.
Apollo, which has $173 billion in assets under management, acquired Presidio in February 2015.
Over the past year, Presidio has made several major deals including the acquisition of Netech, one of the top Cisco solution providers in the Midwest, and Sequoia Worldwide, a red-hot cloud computing consultant. Sequoia has become the foundation of a new cloud business unit within Presidio.
The New York-based solution provider also sold its refurbished hardware reselling subsidiary Atlantix Global Systems, with an estimated $130 million in annual sales, in October.
Presidio, one of Cisco's most strategic channel partners, has more than 2,200 Cisco technical certifications including 150 Cisco Certified Internetwork Experts (CCIE) on staff. Presidio received 15 Cisco awards at this year’s Cisco Partner Summit Global awards ceremony, concluding with Global Cloud Builder Partner of the Year.