JWCA advises digitalocean on its debut $1.5 billion zero-coupon convertible issuance

NOVEMBER 2021 | read press release

Transaction Background

DigitalOcean successfully raised $1.5 billion (upsized by ~44%, inclusive of greenshoe) in the convertible market at very attractive terms (0.00% coupon and 50.0% conversion premium)

DigitalOcean took advantage of strong underlying market conditions and positive momentum in its stock price to successfully execute its first convertible bond offering

DigitalOcean engaged J. Wood Capital Advisors to assist in the structuring, negotiation, documentation and execution of its transaction

JWCA provided extensive analysis for DigitalOcean on deal structuring and related items, such as:

• Convertible structuring

• Analysis of benefits / considerations of a capped call / call spread vs share repurchase

• Accounting and tax analysis/implications

• Syndicate structure and precedent data

• Convertible documentation advice to ensure maximum value and future efficiency/flexibility for the company

JWCA provided advice, support and analysis throughout the negotiation and execution process

Results

DigitalOcean’s convertible issuance was very well-received by investors

• Priced with a 0.00% coupon, which was the low end of the marketed coupon range of 0.00 – 0.50%

• Priced the conversion premium at 50.0%, which was 5% higher than the marketed conversion premium range of 40 – 45%

• Upsized the transaction by $400 million ($1,300mm + $200mm greenshoe, +44%)

DigitalOcean achieved the best convertible pricing for a sub $15bn market cap Technology issuer since the convertible market hit its peak in early 2021