Pushpay co-founder Crowther sells $108m stake, exits

UPDATE: Trading of Pushpay's shares resumes after sale goes through.
Pushpay co-founders Chris Heaslip and Eliot Crowther.

UPDATE / 3.30pm: The bookbuild to sell co-founder Eliot Crowther's 9.03% stake is complete, and trading of Pushpay's shares have resumed. An interview with chief executive Chris Heaslip is coming soon. The co-founders shares were sold at $4.04, against the pre-halt trading price of $4.37, or a total $100 million.

EARLIER / 8.30am: Pushpay shares [NZX:PPH] remain on a trading halt for a bookbuild to sell co-founder Eliot Crowther's 9.03% stake, valued at $108 million on the company's pre-halt price.

Seattle-based Mr Crowther is also leaving the company, effective Thursday, the same day the sale is due to settle.

The NZX and ASX-listed company said in a statement that he is leaving to spend more time with his family. It was not immediately clear why he was offloading his entire stake at the same time.

Nor was it immediately apparent why the executive director and sales rep in the US (PushPay's main market for its payment app) was leaving at such short notice, and before a replacement had been lined up.

Pushpay also says it has now abandoned its goal to list in the US by the end of this calendar year.

"The primary objectives behind the decision were to expand Pushpay’s shareholder base, increase liquidity in the trading of Pushpay shares and enable better access to capital, thereby increasing funding alternatives," the company said in a statement to the market.

"The board considers the primary objectives of the US market listing have been largely achieved and has decided to cease preparations for a US market listing for the time being."

Trading was suspended early Monday afternoon. The sale process, overseen by Deutsche Bank and Craigs Investment Partners is due to complete today.

The deal is fully underwritten, albeit at $4.00, an 8.8% discount to the five-day volume weighted average price (shares were at $4.37 before the halt). Craigs is reportedly taking bids in two-cent increments, with the auction wrapping up at midday.

Pushpay also reiterated that its revenue guidance of $US20.5-22.0m for its quarter ending June 30 and said: "Existing capital is sufficient to reach cash flow breakeven prior to the end of the 2018 calendar year, with cash on hand."

The mobile payments company, which is primarily focused on churches in the US, reported a revenue increase of 105% in the year to March 31 to $US70.2 million, meeting its guidance. Its loss narrowed 9% to $US23.3m, from $US25.3m a year earlier.

Mr Crowther co-founded PushPay with Chris Heaslip in 2011, with each putting $40,000 into the business.

Its pre-halt trading price on Monday put its market cap at $1.2 billion.

A company spokeswoman says Mr Heaslip and Mr Crowther could not speak with media until after the bookbuild is complete later today.

A notice to the NZX this morning gives underwriting agreement details.

Investor 'sad' to see Mr Crowther go

Aaron Bhatnagar, an early stage investor who came on board before Pushpay’s IPO, says he’s sad to see Mr Crowther depart.

“I am very grateful to him, Chris and others who have been instrumental in Pushpay’s story. They have done a wonderful thing in building such an amazing company.

“However, I recognise Eliot wanted to focus on his personal life and I respect that. I do think the company has done well to place all his stock in one go, as it removes any perception of overhang and helps bring on board more investors in the one corporate action.”

As for the US listing, Mr Bhatnagar says being listed on three exchanges was probably an overreach.

“Now that it has a $ 1 billion-plus market cap, US funds are prepared to look at it more closely anyway.”  

The Bhatnagar family, which divested much of its Pushpay holding in March when price levels were elevated, co-invested alongside the NBR Rich List Huljich family in 2014.

Interests associated with Christopher Huljich have a 22% stake in Pushpay. Christopher’s son, Peter, is the New Zealand general manager at the mobile payments company.

PushPay 12-month share price performance.

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