Dive Brief:

• Apollo Global Management LLC is reportedly considering a purchase of cloud provider Rackspace Hosting Inc., according to a Reuters report. 
• The private equity firm has been investing in the technology sector more frequently, including the acquisition of Presidio Inc. last year. The solutions provider is reportedly considering a potential IPO. 
• The purchase price of Rackspace could be as high as $3.5 billion, sources said Friday.

Dive Insight:

Private equity purchases of tech companies have been on the rise lately. Last week, reports surfaced that private equity firms are considering the purchase of some of Hewlett Packard Enterprise’s software assets. Rackspace has reportedly explored a sale several times in the past, so there is no certainty talks with Apollo will result in a deal.

Shares of Rackspace jumped 14% on Thursday after rumors of the potential acquisition surfaced, and trading was subsequently halted.

Rackspace, an independent web hoster and managed services provider, has struggled in recent years. "Although Rackspace now delivers a solid set of basic features, it has not been able to keep up with the pace of innovation of the market leaders," according to Gartner’s Magic Quadrant for Cloud Infrastructure as a Service report released last week. 

Gartner did, however, praise Rackspace for its private cloud offerings, noting they are "thoughtfully constructed, more automated than most competing offerings and operated in a fashion that allows Rackspace to deliver reliable, well-supported services at economical prices and at scale."