Eroad shares jump in NZX debut after $46m IPO
Shares of Eroad [NZX: ERD], the logistics and fleet management company, rose 11 percent on its NZX debut after its initial public offer raised $40 million in new capital to fund international growth plans.
The stock first traded at $3.32, up from its $3 offer price. It recently traded at $3.35, valuing the company at $201 million.
Institutional investors picked up 70 percent of the 15.3 million shares on offer, which saw existing owners sell 2 million shares, or $6 million worth, to keep 75 percent stake in the company. There was no public pool.
Of the new capital raised, $3 million will go to repay bank debt, with the remaining cash used to fund Eroad's growth, particularly in the US, where it launched commercial services in Oregon in April. The company has said it will look at potential acquisitions to further expand and enter new markets.
Founded in 2009, Eroad says it was the first company to provide a nationwide GPS-based road user charge system. It first turned a profit of $2.9 million in the year ended March 31, 2014, on $10 million in sales. In its July prospectus it forecast revenue to rise to $19 million in 2015, and to $34 million in 2016, but expected to post a loss of $1 million in 2015, due to $2 million in listing costs, before returning to profit of $5.5 million in 2016.
The company doesn't intend to pay dividends in the near term.
Eroad is the ninth company to list on the bourse this year, and follows cinema software and analytics firm Vista International Group's [NZX: VGL] debut on Monday, and mobile payment app maker Pushpay's [NZAX: PAY] compliance listing on the NZ Alternative Index yesterday. The NZX has experienced a flurry of tech-based listings, which has been a mixed bag for investors, Gentrack Group [NZX: GTK], the airport and utility software firm, had initially traded above its offer price, but its shareprice dropped after it issued a profit warning, effectively cutting earnings some 32 percent, five weeks after its public float.
Other recent lisitings, including Serko, [NZX: SKO] the travel software booking business, ikeGPS, [NZX: IKE] the portable measuring app, and Scales Corp [NZX: SCL], the fruit and vegetable packaging and logistics company, have all failed to trade above their offer price. While the government's last partial privatisation, Genesis Energy, Intueri Education, the education providers, Metro Performance Glass, the glass manufacturer, and Vista have all traded above their IPO prices.
The sole lead manager for the offer was First NZ Capital, with Deutsche Craigs as co-manager.