Rakon sells shares in Thinxtra, lifts FY18 guidance

Chief executive Brent Robinson said "There may be a demand for Rakon to sell more shares and we will consider that as it arises"
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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.

(BusinessDesk)


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13 Comments & Questions

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Is this dog about to have its day or are they just barking at the moon? Stay tuned.....

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Well, the startup investments recovered and retaining 18.3% of a company valued at 60M is a tick.

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Yes but it is still pretty telling the the thing that is delivering is the one that Rakon management are not managing.

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Exactly. Perhaps they should start a trading desk if they're so good at it. After all, they need to be able to buy a new set of Beemer's every year!

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It tells you their investment and diversification into IOT was well played. Hats off

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or just pure luck.......

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Jesus wept - a successful Rakon initiative...unfortunately only $800k profit which doesn't touch the sides of the $100s of millions of shareholder wealthdestroyed by an incompetent Board and management team.

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can someone fact check it for me?

I have calculated the following on this investment by Rakon
984,649 shares before sale
199,242 will now be sold for $3.0m, a price of around $15 (so fair value).
Rakon has invested $5.8m into Thinxtra - so an average price of $5.90 per share.

$5.90 to $15.0 works out to be an appreciation of 157%.
Where has the return on investment of 257% come from?
For that to hold true the fair value would have to be $21.03.

Help? I'm lost.

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The return is on the "initial" investment, which was $800k for 11.4%. The 11.4% would have been diluted since then - so not sure of the "average" price of that investment was.

Typical PR - choose some stats that sound great, forget the real facts.

A bit like saying that the average payoff on lotto is heaps if you discard losing tickets.

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Rakon has a long way to go before building up their credibility and accountability

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Maybe they should sell off their "core" operations and buy more Thinxtra shares. ;-)

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Truth is these St Kents boys were never good at maths..

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NZs first real IOT success story. Looks like they could be well positioned should unlicensed spectrum providers hold market share against licenced in the coming years

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