Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


US investors pour $82M into Xero; early payday for founders

US investors pour $82M into Xero; interim payday for founders

By Pattrick Smellie

Nov. 30 (BusinessDesk) - Two American investors have increased their interest in cloud accounting software provider Xero by a total of $82 million, of which $60 million is newly issued capital and $22 million is to purchase of shares from its three largest shareholders.

The $22 million is split three ways between director Craig Winkler, chief executive Rod Drury, and co-founder Hamish Edwards, who will receive around $11.8 million, $7.4 million, and $2.5 million respectively for the sale of portions of their holdings at the transaction price of $6 a share.

At the same time, Peter Thiel-backed Valar Ventures of San Francisco will raise its holding in Xero to 7.0 percent from 3.9 percent, and Massachusetts-based Matrix Capital Management's stake will rise to 9.8 percent from 1.8 percent.

Winkler's interest in the fast-growing accounting software developer, which has global ambitions, falls to 15.7 percent from 19.5 percent, Drury goes to 18.5 percent from a 21 percent holding, and Edward's shareholding reduces to 4.9 percent from 5.7 percent.

"The board's decision to increase funding follows the announcement on Nov. 14 that Xero will accelerate its investment in the business to take advantage of market conditions," directors said in a statement to the NZX.

The company is loss-making at present, judging it better to invest in accelerated growth to capture market share in the massive, emerging global market for online, cloud-based business systems.

It reported $38.7 million in monthly revenues in November, up from $18 million a year earlier, a $7.7 million loss for the half year to Sept. 30, and an increased loss for the full year. It had $30.6 million cash in hand at Sept. 30.

A total of 10 million new shares have been issued at $6 a share, representing the 20-day volume-weighted average price at the time the transaction was negotiated. Xero shares rose 1.7 percent to $6.55 immediately after the announcement.

The purchase of existing shares was made in order to minimise dilution to existing shareholders, Xero's NZX statement said.

"We believe Xero is the global market leader in cloud-based small business accounting software," said David E Goel, managing member of Matrix Capital. "The future is in the cloud, Xero is there, and we want to be there."

Valar's Andrew McCormack said the investment firm, backed by Paypal co-founder and billionaire Peter Thiel, was confident that "Xero has a very long runway."

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

BusinessDesk: APN's NZME Sees Future In Paywalls, Growth In Digital Sales

APN News & Media has touted a single newsroom concept for its NZME unit in New Zealand, similar to what Germany's Die Welt uses, saying an 'integrated sales proposition' is helping it win market share, including ... More>>

Labour Party: Global Milk Prices Now Lowest In 6 Years

The latest fall in the global dairy price has brought it to the lowest level in six years and shows there must be meaningful action in tomorrow’s Budget to diversify the economy, says Labour’s Finance spokesperson Grant Robertson. “Dairy prices ... More>>

BusinessDesk: NZ Inflation Expectations Creep Higher In June Survey

May 19 (BusinessDesk) - New Zealand businesses lifted their expectations for inflation over the next two years, sapping any immediate pressure on the Reserve Bank to cut interest rates, and prompting the kiwi dollar to jump higher. More>>

BusinessDesk: Lower Fuel Costs Drive Down NZ Producer Input, Output Prices

May 19 - Producer input and output prices fell in the first quarter, mainly reflecting lower fuel costs and weakness in prices of meat and dairy products. More>>

Media: Fairfax Media NZ Announces Senior Editorial Team

Fairfax Media New Zealand has today confirmed its new editorial leadership team, as part of a transformation of its newsrooms aimed at enhancing local and national journalism across digital and print. More>>

Science: Flavonoids Reduce Cold And Cough Risk

Flavonoids reduce cold and cough risk Research from the University of Auckland shows eating flavonoids – found in green tea, apples, blueberries, cocoa, red wine and onions – can significantly reduce the risk of catching colds and coughs. The research, ... More>>


BusinessDesk: RBNZ House Alert Speech The Catalyst For Government Action

Prime Minister John Key all but conceded that pressure from the Reserve Bank of New Zealand for concerted action on rampant Auckland house prices was one of the main catalysts for the government's weekend announcements about tightly ... More>>

BusinessDesk: How To Fall Foul Of The New Housing Tax Rules: Tips From IRD

Just because you rented out your investment property doesn't absolve you from paying tax, says the Inland Revenue Department in a summary of commonly made mistakes by non-professional property investors when it comes to their tax liability.More>>

Legal: Superdiversity Law, Policy And Business Stocktake Announced

Mai Chen, Managing Partner at Chen Palmer New Zealand Public and Employment Law Specialists and Adjunct Professor of Law at the University of Auckland, today announced the establishment ... More>>

Housing: More House Price Gains Expected

House price expectations remain high, with a net 56% of respondents expecting house prices will increase. Fears of higher interest rates are fading, consistent with the RBNZ’s signals this year. Affordability and a lack of houses for ... More>>

TDDA: State-Of-The-Art Drug Testing Laboratory To Open In Auckland

World leading drug testing agencies, The Drug Detection Agency (TDDA) and Omega Laboratories, open New Zealand laboratory More>>

Network: Bigpipe Launches Ultra-Fast Broadband Into Wellington

Bigpipe Launches Ultra-Fast Broadband into Wellington Naked broadband provider Bigpipe has extended its national reach, announcing today, the launch of its unlimited UFB offering into Wellington. The Spark Venture business is giving Wellingtonians the ... More>>

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news