Presidio, Inc. (Pending:PSDO) has filed an S-1/A, setting the terms for its upcoming initial public offering with the Securities and Exchange Commission.

The company intends to sell 16,666,666 shares at a marketed price range of $14 to $16. It also has an additional 2.5 million shares as an overallotment option for its underwriters. If PSDO prices at the midpoint of its proposed range, and underwriters exercise their options to purchase additional shares, the company will have a market capitalization of $1.4B.

We previously highlighted this deal on our IPO Insights platform.

The underwriters include J.P. Morgan, Citigroup, Barclays, RBC Capital Markets, Credit Suisse, Goldman, Sachs & Co., Wells Fargo Securities, Evercore ISI, Guggenheim Securities, Apollo Global Securities and LionTree.

Business overview

Founded in 2003 and based in New York, Presidio Inc. is a reseller of a suite of IT solutions for the North American middle market. It offers businesses security, cloud and digital infrastructure solutions. As of June 30, 2016, the company reports it had 60 offices and more than 500 employees located across the U.S. The company reports that it also served more than 7,000 businesses and government organizations as of that date.

The company was acquired by PE firm Apollo Global Management in December 2015.

Executive management

Robert Cagnazzi is the chief executive officer of Presidio and has served in that role since Feb. 2012. Prior to that, Cagnazzi founded BlueWater Communications LLC in 2006, serving as its CEO until Presidio acquired it in 2012. He also previously served as the CEO of the North American division of Dimension Data Holdings PLC from 2001 to 2006.

Paul Fletcher is the chief financial officer and executive vice president of Presidio and has served in those roles since Aug. 2007. Prior to that, Fletcher was the chief financial officer and a senior vice president of Trex Company, Inc. from July 2003 until Sept. 2007 and as its vice president of finance from Oct. 2001 to Dec. 2002. Before that, Fletcher worked in a variety of different executive positions at Excel Telecommunications, Lomas Financial Corporation, and AMX LLC. He was a director of Vul Corporation from Sept. 2011 until July 2013.

Financial highlights, risks and use of proceeds

Presidio reports that it had total revenues of $2.1749 billion for the year that ended on June 30, 2016. For the six months that ended on Dec. 31, 2016, the company reported total revenues of $1.495 billion. During the same six-month period in 2015, it reported total revenues of $1.3746 billion. The company reports it had a net loss of $3.4 million for the fiscal year that ended June 30, 2016. It reported net income of $10 million for the six months that ended on Dec. 31, 2015, and of $9 million for the six months that ended on Dec. 31, 2016.

Presidio is heavily indebted. It intends to use its proceeds to repurchase its subordinated and senior notes and any remaining to repay a portion of its credit facility. Among its risk factors, the company reports that if economic conditions worsen, it may affect spending on Internet technology and harm its business. It also indicates that its business could be harmed if governmental organizations decide to end their relationships with the company.

Competition

Presidio identifies numerous competitors and states that the environment in which it operates is highly competitive. The stiff competition the company faces is also one of its identified risk factors. Among its competitors, Presidio counts Dell, Hewlett Packard (NYSE:HPE), Computer Sciences Corporation (NYSE:CSC), Apple (Nasdaq:AAPL), and Amazon Web Services (Nasdaq:AMZN), among others.

Using last 12 months' sales, Presidio reflects a .49x P/S ratio (also assuming market capitalization of $1.4B above). This is in line with many peers above and below the industry average of 0.9x P/S.

Conclusion: Buying opportunity

Presidio has shown strong revenue growth, profitability, and is priced competitively with peers. Although it is highly indebted, the company intends to use all of its proceeds to repay its debt.

Following Snap's (NYSE:SNAP) initial success, the IPO market could be heating up.

We recommend that investors consider a small allocation in this IPO.