By Neha Dimri
Jan 18 Shares of CyrusOne Inc rose as much as 15 percent on their market debut after the data center operator priced its offering at the high end of its expected price range.
CyrusOne shares closed up nearly 12 percent at $21.20 on the Nasdaq on Friday while majority owner Cincinnati Bell's stock closed down 6 percent at $5.00 on the New York Stock Exchange.
"What happened with CyrusOne is that people looked at the parent and found that the parent was very weak. They've basically spun off a division that's worth more than the parent," said Francis Gaskins, a partner at IPODesktop.com.
Texas-based CyrusOne priced its offering of 16.5 million shares at $19 each, raising $313.5 million. At the offer price, CyrusOne has a market value of about $1.18 billion.
Cincinnati Bell, valued at about $1 billion, will own about 71.6 percent of CyrusOne, which rents equipment, space and bandwidth to store and transfer data.
CyrusOne had 24 data centers in Austin, Chicago, Cincinnati, Dallas, Houston, London, South Bend and Singapore as of March 2012, according to its website.
CyrusOne has structured itself as a REIT, joining a string of technology companies looking to save on tax through the structure.
Companies with large real estate assets eye a REIT structure as it helps reduce the tax burden on their rental income. Shareholders also stand to gain as REITs are required to distribute at least 90 percent of their profits as dividends.
Shares of another REIT and data center company, Digital Realty Trust Inc, have risen about 8 percent in the last month, while those of data center operator Equinix Inc, which is planning a REIT conversion, have risen about 9 percent.
Industry research firm Gartner estimates that the global market for data center services was about $150 billion in 2011 and will rise to about $200 billion in 2012, the company said in a regulatory filing.
Morgan Stanley and BofA Merrill Lynch were joint-bookrunners to the offering.
SUNCOKE ENERGY DEBUT
Shares of Illinois-based SunCoke Energy Partners LP opened flat on debut after the metallurgical coal producer priced its offering at the low end of its expected price range.
The company priced its offering of 13.5 million shares at $19 each, raising $256.5 million.
The downstream energy limited partnership listed Credit Suisse and Citigroup as lead underwriters to the offering.
SunCoke Energy Partners' share closed down 4 percent at $18.25 on the New York Stock Exchange.