Smartpay shares soar to 2-year high as Milford Asset bets on potential
"I'm am not sure we are on the forefront of non-cash anymore. I was in Melbourne recently and everywhere had tap and go terminals, I have seen very few in Auckland"Featured comment
Smartpay [NZX: SPY] shares have jumped to a two-year high after fund manager Milford Asset Management disclosed a 6.3 percent stake in a bet on the potential for the restructured eftpos company to repeat its New Zealand success in Australia.
SmartPay climbed as much as 2.6 percent to 39 cents, the highest since July 2011, having soared 23 percent yesterday.
The company has transformed itself in the past two years, recapitalising its debt and equity, replacing three of its four directors, installing a new managing director, acquiring a rival to become the biggest New Zealand operator with about 30 percent market share, and overhauling all of its business. In Australia it is still a small player in a market dominated by banks.
"Most people think it's still a terrible company, which is great for an investor," said Brian Gaynor, chairman of Milford's investment committee. "But it is nothing like the company it was. The restructuring has given it a reasonable chance of being successful in Australia."
Last week Milford said it bought 3 million shares at 28 cents apiece, lifting its holding to about 10.8 million and requiring it to disclose a substantial holding. The shares are held in its Milford Dynamic Wholesale Fund, which invests in higher-risk, and often smaller growth companies.
Gaynor said New Zealand is at the forefront of the world in terms of non-cash transactions and uptake of eftpos technology. Australians are typically still using cash while New Zealand has become much more of a cashless society.
"They're hoping to take that model and try to make it work in Australia," he said.