Xero chief Rod Drury sells $94.5m of shares

Xero chief executive Rod Drury says "One of the great things about going public is you can do this without selling the whole company"
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Xero chief executive and founder Rod Drury sold $94.5 million of shares, boosting the accounting software firm's liquidity as it prepares to shift to a sole ASX listing. 

Drury sold 3 million shares in a placement to institutional and professional investors at $31.50 apiece in his biggest transaction since taking the company public in 2007. Drury remains Xero's largest shareholder with 17.7 million shares, or about 13 percent. 

The transaction comes hot on the heels of Xero's first-half earnings announcement when it posted positive pre-tax earnings and unveiled plans to delist from the NZX in favour of a sole listing across the Tasman, which it says will encourage a broader range of analyst coverage and a wider pool of investors. 

Drury said the sale was part of that strategy to improve liquidity in the stock with growing demand among global investors keen to back the company, which incorporates the move to a single-listing on the ASX. 

"We've had global-grade investors wanting to invest in the company with really strong demand," Drury said. We got advice on how to clear up our shares to allow their funds to come in - that's what we've put together." 

He said the $31.50 per share sale was a "good price", with the stock closing at $33 yesterday, having soared 89 percent so far this year. 

Drury has watered down his stake in Xero before, his last being the sale of 1 million shares in 2015 at $20.01 apiece. When it listed, he owned 45 percent of the company with about 24.7 million shares, reducing that holding as the software company made headway around the world and attracted major institutional investors including big names such as Paypal co-founder Peter Thiel. 

"One of the great things about going public is you can do this without selling the whole company," Drury said. 

Drury said the funds will lay the foundation for his future plans for philanthropic and social endeavours, although his family will be looking after that for now while he focuses on Xero. 

RELATED VIDEO: Rod Drury talks to Susan Wood about Xero's decision to consolidate the company's shares across the Tasman (Nov 10)

(BusinessDesk)


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Cash is King

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Now that's a great return. I shouldn't say it, but I must admit to being a little jealous. $94 mill would go a long way towards helping out a bit.

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Drury once advised investors nervous about the company's short-term volatility to put their shares in the "bottom drawer and forget about them", so what does this signal?

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That's time to buy some if you got the cash.

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Drury has cashed out multiple times at lower levels in the past. After more than a decade building up the company (and shareholder wealth), what does that tell you?

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That he works hard and is sticking to his plan?

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#missedtherhetoricalquestion

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Thanks Rod. Great timing to do this when the share price is already weak. I see the share price is down this morning already and not just a few cents.

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All shareholders are on an even keel information wise, because Xero has just announced its results to the public.

So when would Rod be allowed to take some money off the table? Hasn't he delivered enormous shareholder gains? At what point is he allowed to enjoy some fruits of his success? Or do these grumbling shareholders think that only they are allowed to have large outsized gains, and not the person who took on all the risk back in the early days of the company?

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Agree with you. What he has done is to show Kiwi tech companies that you don't necessarily need to bail out at an early stage and that it is possible to raise funds and compete with the big boys on the international stage. For this alone, he needs to be commended. Hope Xero will inspire others. Surely, he's allowed to cash out some gains along the way.

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A lot of the shareholders are accountants or financial mangement types, since they saw the early value in the accounting software of Xero's. Well, ask yourself, what do the bean counters do best? Grumble about costs and living it up once in a while.

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How about supporting other New Zealand Tech companies your managers set up like GeoOp.

Leanne Graham got Xero to where it is today so why not return the favour?

GeoOp is just waiting to get on the main board to get some investment behind it.

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He is talking about charity, Geo-op probably qualifies for that.

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certainly seems to be a not for profit.

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I’m sure it will be of interest for Rod Drury to read that Leanne Graham got Xero to where it is today.

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You backed the wrong horse Ted. Might also want to look back in history and see how much money GeoFlop blew from the NZ taxpayer.

Build a bridge, get over it and move on. No one cares, mate...

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With one notable exception the NBR kinda serves as Xero's in house PR company

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If it wasnt for NBR's reporting on what is a kiwi success story there would be little press regarding Xero .... maybe Rod should apply to be on the next "Married at first Sight" to get a bit of attention from main stream media

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Kiwi, not kiwi. Please get it right.

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Nothing wrong with kiwi. It's just an adjective.

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Yep, 'kiwi' can be an adjective as well as a proper noun, 'Kiwi'; depending on context.

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This is all about share liquidity.

Drury said himself he wanted to concentrate on gifting. It's not easy to sell the remainder of his $575 million shareholding in the glass bowl of NZ, without huge scrutiny.

Time for Rod to enjoy his success.

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I can think of 94.5 million reasons it's not "all" about share liquidity.

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Remember Drury remains the largest share holder in Xero with "around 13%". Great article. Well done to Rod for sticking to his guns and holding on this long. Nothing wrong with leaving something on the table for the next investor. And nothing wrong with taking some money out when he is still young enough to enjoy it! If he didn't have faith in the company he would have sold many more shares than he did.

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When investment banks sell fund products to clients they have to disclose the rebate they get from the fund manager.

When accountants sell accounting software to clients they don't disclose sh%t.

And thus Xero exists.

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and why would they? do retailers have to disclose the cost they pay for products at wholesale to all their customers? Of course not - and it's no different for accountants who sell Xero to their clients.

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Maybe just cashing in a little before Capital Gains Tax is introduced. I’m surprised National views the tax as ineffective given this transaction alone would have generated about $20 million in Tax revenue. Who needs profits and dividends when you can take this sort of money tax free.

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Perhaps the company is officially 'unlatched'? They are claiming on an NZ Herald ad that Excel is not "integrated".
ROFL

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Reading some of these replies, one realises what a jealous bunch you all are. The guy has probably 80-90% of his wealth in one Company. He is selling shares in a mature Company to informed investors. His crime appears to be that he has been successful. This is not Wynyard . Intueri etc. Good luck to him, he has made a lot of other people a substantial amount of money, he owes it to his family and himself ro realise some of these paper profits.

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