NEW YORK ( IPOfinancial) -- InterXion (INXN) plans to price its initial public offering later this week and should see at the least decent aftermarket performance.

As one of the largest European carrier-neutral colocation data center service providers, InterXion has attracted more than 1,100 clients by offering reliable performance for time sensitive applications.

Even though Europe is slightly behind the outsourcing trend already embraced by other regions of the world, the growth in Internet traffic, cloud computing and consumer applications has made it difficult for companies to sustain in-house data operations. IDC is projecting a 5-year compounded annual growth rate of 19% by 2014 as market demand for colocation data centers increases in INXN's core areas such as the U.K., France, Germany and The Netherlands.

Although new demand may intensify potential competition, there are significant barriers to entry within the industry. It has become increasingly difficult for new entrants to not only identify acceptable locations for new sites but also to overcome political and financial hurdles. Additionally, customers cannot afford to jeopardize their data security. INXN has built a reputable brand, offering up to a 99.999% guaranteed level of uninterrupted power supply and is well-positioned to thrive in this new IT environment.

INXN's clients benefit from superior levels of connectivity, as its data centers act as hubs to "facilitate the processing, storage, sharing and distribution of data, content, applications and media." Since 2006, INXN has made significant investments to expand its data center footprint by locating ideal sites that offer close proximity to the intersection of telecommunications fiber routes and power sources.
  • InterXion Holdings: INXN
  • Lead Underwriter: Bank of America/Merrill Lynch
  • 18.55 million common shares
  • Current Price Range: $11 to $13
  • Deal Size to the mid-range: $222.6 million
  • Market Cap to the mid-range: $779.9 million
  • Week Due: Jan. 24, 2011
  • Sector: Telecommunications

Additionally, INXN will be responsible for approximately 87.6% of the IPO and plans to use the expected $176.6 million in proceeds to continue this organic growth model, while debt from the recently issued notes will remain on the books.

With 28 data centers throughout major metropolitan areas in 11 European countries, INXN enjoyed consistent top-line growth by fostering a "community of interest." For the first nine months of 2009, revenue grew 21% from year-ago levels, due to improved sales to both new and existing customers across all regions, including the company's new data centers in Dublin and Frankfurt.

While there appear to be few obstacles standing in the way of INXN's success, some may be concerned with Baker Capital's 47.5% post-IPO owner ownership. However, the firm will not be selling at the IPO and has expressed interest in receiving additional preferred shares at a discount, in order to increase their position. Considering management has grown organically, using fiscal responsibility, and that this relationship with Baker dates back to 2000, it should not prevent a decent aftermarket performance.
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