Rakon has sold about a fifth of its shares in start-up investment Thinxtra for A$3 million, which it will use to pay off debt, and lifted its earnings expectations for 2018.
The sale is conditional upon the completion of Thinxtra's pre-emptive rights process for all shareholders, and is expected to conclude by the end of November, it said. It plans to sell 199,000 shares, leaving it with 785,000 shares in Thinxtra, or 18.3 percent of the company. Rakon will make A$1.8 million gain on the sale before costs, representing a return on initial investment of 257 percent, it said.
Rakon initially invested A$800,000 in the 'internet of things' startup for an 11.4 percent stake in late 2015, which it lifted to 18.1 percent in early 2016.
The majority of shares have been sold to new Thinxtra shareholders who missed out on the Thinxtra Series-B capital raising, which was recently over-subscribed, and the new shareholders are institutions with a strategic interest in the 'internet of things', it said.
"There may be a demand for Rakon to sell more shares and we will consider that as it arises," chief executive Brent Robinson said. "We remain committed to being a substantial investor in Thinxtra and are positive about the company, the IoT and future returns from our investment."
In August, Rakon predicted a return to profit in the year ending March 31, 2018, with underlying earnings before interest, tax, depreciation and amortisation of between NZ$9 million and $11 million. Today, it upgraded that to between $10.7 million and $12.7 million, and reiterated its net profit expectation.
Rakon's NZX listed shares last traded at 22 cents, and are unchanged this year.
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