Xero leaps 10% to new market cap high of $2.33 billion
The loss-making online accounting software company, with annual revenue of $70 million, sees its shares go through the roof as it raises $180 million.
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Xero shares [NZX:XRO] rose 10.30% to a new high of $19.80 as the NZX opened this morning, taking the online accounting software company's market cap to $2.33 billion.
This morning, the company said it had raised $180 million in new capital.
Founder Rod Drury says the new cash comes from key US shareholders sends a strong signal to rivals that there are no constraints on the funds it needs to win global market share.
The company sold 9.92 million shares at $18.15 apiece, or 1.1 percent above their price last week, to Matrix Capital Management, Peter Thiel-backed Valar Ventures and other US investors. Cash reserves have jumped to $230 million from the $55 million it disclosed as at Sept. 30.
"We've been trading on a pretty good valuation and this is a relatively small percentage of the company to give up for a safety net," Mr Dury says. "It sends a strong signal to incumbents around the world that we have no constraints."
"We now need to build the best global management team," he said. "This is a further signal that we can get the best."
Xero isn't planning any acquisitions with the new capital and it is "more about building a war chest, building a tonne of options," he said.
The sale represents 8 percent of the enlarged capital of the company and gives it a much wider cash buffer to fund growth as it chases 1 million customers, almost five times its current customer base of 211,000.
"Xero is emerging as the definitive software platform for small business worldwide," David Goel, managing member of Matrix, said in the statement. "Having empowered hundreds of thousands of small and medium-sized businesses in New Zealand, Australia, and the United Kingdom, Xero is poised to do the same for its 29 million potential customers in the US. We are adding to our investment to help facilitate and accelerate this goal."
Valar and Matrix last injected funds into Xero in November, with $60 million of new capital, while buying $22 million of shares from director Craig Winkler, Drury, and co-founder Hamish Edwards at the same time.
US investors accounted for $147 million of the funds raised and "represent some of the most enduring and well-capitalised asset management firms in the world, all of whom will assist the company with its strategy and execution in the US market." it said.
The shares have soared 268 percent in the past 12 months.
With reporting by BusinessDesk.
NBR staff
Mon, 14 Oct 2013
Mon, 14 Oct 2013
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Xero leaps 10% to new market cap high of $2.33 billion
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