Zayo Group Climbs in Trading Debut After Scaling Down IPO

Zayo Group Holdings Inc. rose in its trading debut after the provider of Internet connectivity services scaled back its initial public offering by selling a smaller number of shares below the marketed range.

The stock climbed 16 percent to $22 as of 4 p.m. in New York, giving the company a market value of $5.3 billion. Zayo and existing shareholders sold 21.05 million shares for $19 each, according to a statement yesterday, after offering 28.9 million shares for $21 to $24.

Zayo was co-founded by Dan Caruso, 51, a former founding member of Level 3 Communications Inc., which it lists as a competitor in the filing. Since Zayo started marketing its share sale to investors on Oct. 6, Level 3’s shares declined 9.1 percent through yesterday as the broader market fell. Other pending IPOs -- from Internet domain marketplace GoDaddy Inc. to online-dating site Zoosk Inc. -- are considering waiting until 2015 to debut amid the selloff, people familiar with the matter said.

“Trying to IPO in a volatile market isn’t easy,” said Jackie Kelley, global IPO markets leader for Ernst & Young LLP. “The challenge is that investors, when the markets are volatile, focus on their existing portfolios.”

Delayed Offerings

In Europe, deals are getting postponed indefinitely. Virgin Money Holdings (UK) Plc., the lender backed by billionaire Richard Branson, said today it is delaying its London offering amid the market selloff. U.K. lender Aldermore Group Plc also shelved its IPO, joining advertising agency ItaliaonLine SpA, Scottish homebuilder Miller Group Ltd. and French business-services company Spie SA.

Zayo offers bandwidth infrastructure and services, with a network covering 81,000 route miles, according to its website. The company’s customers include wireless carriers, media companies, Internet businesses and governments.

Revenue jumped 12 percent to $1.12 billion in the 12 months through June 30, regulatory filings show. At the same time, the Boulder, Colorado-based company’s net losses widened to $179.3 million as expenses increased. Zayo has made $3.74 billion worth of acquisitions since 2007, according to the prospectus.

Battery Ventures, Charlesbank Capital Partners LLC, Columbia Capital LLC, M/C Partners and Oak Investment Partners sold shares in the offering, along with Caruso, who serves as chairman and chief executive officer.

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