Zayo's IPO soars as investors bet on business demand for high-speed broadband

Fiber network company Zayo Group Holdings' initial public offering (IPO) was a success when investor enthusiasm about growing commercial demand for high-speed broadband drove up the company's stock as much as 20 percent.

The stock hit a high of $22.85 on the NYSE, driving the company's value to $5.35 billion. The stock was posted at $19.

It's not as if Zayo is a stranger to the telecom space. The company has been in business since 2006, brought in $1 billion in revenue in 2013 and has built fiber networks spanning 81,000 route miles and touching about 15,000 buildings in U.S. and European cities. On the other hand, the company's net loss grew to $137.2 million from $1.2 million in 2012. Zayo, which acquired AboveNet in 2012, has a debt of about $3 billion on March 31, Reuters reported.

It's also not as if Zayo, which was founded by former Level 3 executives Dan Caruso and John Scarano, is alone in reaping the rewards of an enthusiastic market. Its competitors, including Level 3, CenturyLink (NYSE: CTL) and Equinix, have also seen gains.

"The entry barrier to competition is very high," Equities.Com Research Director Francis Gaskins told Reuters, pointing out that investors therefore like companies with good topline visibility.

Zayo said it plans to use the offering's proceeds to pay down debt and for general corporate purchases.

For more:
- Reuters has this story
- NASDAQ  had this story
- The Wall Street Journal has this story (sub. req.)

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