VMware, the software group being dubbed “the new Google”, is expected to float in New York tomorrow in a deal likely to value the company at about $10 billion (£5 billion), marking it out as the top initial public offering of the summer.

VMware makes “virtualisation” software, which transforms the way in which companies manage their server infrastructure – the hardware used to store digital data.

The software allows a single server unit to be split among several functions, a process that increases efficiency and can cut costs.

Despite the continuing market turmoil, the group, which was founded in 1998 and now counts every firm in the Fortune 100 as a client, last week raised its IPO price range to between $27 and $29 a share, from $24 and $25.

If the offering, in which about 10 per cent of the company is expected to be sold to the public, achieves the midpoint of the new range and an overallotment of shares is brought into play, the company will be valued at $10.5 billion.

The group was bought by EMC Corp, the database giant, for $625 million in 2004.

Toni Sacconaghi, the Sanford Bernstein analyst, wrote in a note: “Virtualisation is one of the fastest-growing areas in the tech sector – a fact that should lead to significant investor interest in VMware.”

The float will raise interest in other players in the same sector including SWsoft, a privately owned competitor that is registered in Bermuda and employs 500 developers in Russia. The group was founded by Serguei Beloussov, a Russian-born, Singaporean, claims to be growing faster than VMware and is thought to be eying the IPO market.

About 3 per cent of the world’s servers use virtualisation software, a portion that is expected to surge to about 30 per cent over the next few years.

VMware’s preliminary results for the first half of this year project a 95 per cent surge in revenues to $555.5 million.

Net income more than doubled to $75.3 million, compared with the same period a year earlier.

Other big investors in VMware include Cisco, the internet hardware giant, which bought a 1.6 per cent stake in the company for $150 million, and Intel, the largest chipmaker, which acquired a 2.5 per cent stake last month for $219 million.

Citigroup, JPMorgan and Lehman Brothers are lead underwriters for the IPO.

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