Energy Mad hits IPO target

UPDATE Oct 17:  In a statement to the NZX this afternoon, Energy Mad [NZX:MAD] said its IPO had met its target minimum of $5 million. The company had sought up to raise up to $6 million (implyiing a market cap around $30 million), with a further $4 million of shares owned by its founders available in the event the offering was over-subscribed. The company will list from October 19.

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UPDATE SEPT 30:  The first tech listing on the NZX since Xero in 2007 still hangs in the balance.

Energy Mad today confirmed it missed its IPO close-off deadline of September 23 - a possibility first flagged by NBR on September 21 (see below).

In a statement, chairman Rick Ramsey said it was unlikely the $5 million threshold would be met with out an extension period.

The IPO has been extended until October 12.

The anticipated listing date has been pushed out from October 3 to October 19.

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Tech IPO might miss deadline - banker

SEPT 21: Energy Mad’s IPO, set to close Friday, may have to be extended.

The company is angling to become the first local tech company to go public since Xero listed in 2007 (NZX chief executive Mark Weldon hopes for a second by the end of this year as Fairfax prepares a partial float of TradeMe on the local exchange).

The Christchurch-based energy-efficient bulb maker is seeking to sell around 20% of its shares (at $1 each) in the public float for $6 million, valuing the company at around $30 million. The minimum subscription is $5 million. Missing mark would trigger the cancellation of the IPO, according to the company's prospectus.

Around $4 million in shares - from the holdings of founder and MD Chris Mardon and executive director Tom MacKenzie - are available in the event the IPO is over-subscribed.

But yesterday Woodward Partners – the boutique Wellington investment bank that’s organising and advising on the public offering – told NBR it was possible the IPO would miss its 5pm Friday deadline.

With the offer not underwritten, that would lead to a delay in Energy Mad's listing, currently scheduled for October 3 (under the ticker MAD).

Woodward Partners was having "high value conversations" with a couple of large Australian institutional investors who could see the company hit its IPO target, but it was not clear if they would commit by the end of this week, Mr Donnell said.

Mr Donnell said he was confident the IPO would be fully subscribed, but given a couple of institutional investors had come onto Woodward's radar relatively late in the piece, it could make sense to extend the deadline.

Running an IPO was an expensive process for any company, Mr Donnell said. "And you can't go back and talk to these people later without initiating another set of IPO costs."

Ultimately, any decision on a delay was up to Energy Mad's board.

Yesterday, founder and managing director Chris Mardon told NBR he was not worried that the institutional investors had yet to commit.

“I’ve been told 80% of the money [for an IPO] always comes in on the last day,” Mr Mardon said.

"They want to hold on to it as long as possible."

If the Energy Mad IPO is pushed out, it will join an international trend. High-profile US techs Facebook, GroupOn and Zynga have all recently delayed public listings amid market volatility. 

Existing shareholders
Existing shareholders will continue to own around 80% of Energy Mad after the float.

They include Mr Mardon (31%), co-founder and executive director Tom MacKenzie (31%), and ACC (3%).

Investors from across the Tasman include Sydney-based Capital Trading and Holding (9.6%); Melbourne-based Intermoco 8.5% and Queensland’s Mingela Pty (3%).

Into the black
According to its prospectus (results were filed with the Companies Office but not made publically available), Energy Mad made a $815,000 net profit after tax on revenue of $8.6 million during its 2011 financial year.

In 2010, the company made an ebitda loss of $340,000 on revenue of $5.94 million.

It projects it will start paying a dividend in 2013, when it predicts it will turn a $4 million profit on $21 million revenue on the back of a fast-growing international market for energy-efficient bulbs.

Energy efficient pitch
Energy Mad’s bulbs are examples of compact fluorescent lamps (CFLs), the squiggly eco-bulbs now familiar to supermarket shoppers everywhere.

Many companies make CFLs, Energy Made – which manufacturers in a Chinese factory co-owned with a local partner – says its tweaked design makes for smaller, brighter, more energy efficient and longer lasting bulbs.

The design is patent-protect in the US, China, Europe, Australia and New Zealand.

Over the past five years, Energy Mad bulbs have been bought by 900,000 Australian households and 500,000 in New Zealand, the company’s prospectus says.

Part of Energy Mad’s strategy is to partner with power companies that in turn promote its bulbs.

The prospectus says Energy Mad’s current power company clients include US utilities Puget Sound Energy (over 1 million customers), AGL Energy (over 3.3 million customers), EnBW (over 5.4 million customers) and New York State Energy Research and Development Authority (servicing a population of over 19 million).

The US effort has produced modest results so far. Last year, $5.9 million of Energy Mad’s $8.6 million revenue came from Australian sales, while nascent pushes into the US and Europe generated $1.3 million and $0.8 million sales respectively.

But Energy Mad sees the channel as an area of high growth as utilities seek to manage peak usage, and react to increasing regulatory pushes around power consumption.