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


UPDATE2: Xero shares soar after capital raising

UPDATE2: Drury says $180M capital raise ‘sends strong signal’ to rivals; shares soar

(Updates to show shares rose to a record when they resumed trading)

Oct. 14 (BusinessDesk) – Rod Drury, founder of Xero, says the cloud-based accounting company $180 million capital raising 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 shares jumped 9.8 percent to $19.70 and earlier touched a record $19.90 when they resumed trading, after being halted for the capital raising. 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,” Drury told BusinessDesk. “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 265 percent in the past 12 months.


© Scoop Media

Business Headlines | Sci-Tech Headlines


DIY: Kiwi Ingenuity And Masking Tape Saves Chick

Kiwi ingenuity and masking tape has saved a Kiwi chick after its egg was badly damaged endangering the chick's life. The egg was delivered to Kiwi Encounter at Rainbow Springs in Rotorua 14 days ago by a DOC worker with a large hole in its shell and against all odds has just successfully hatched. More>>


Trade: Key To Lead Mission To India; ASEAN FTA Review Announced

Prime Minister John Key will lead a trade delegation to India next week, saying the pursuit of a free trade agreement with the protectionist giant is "the primary reason we're going" but playing down the likelihood of early progress. More>>



MYOB: Digital Signatures Go Live

From today, Inland Revenue will begin accepting “digital signatures”, saving businesses and their accountants a huge amount of administration time and further reducing the need for pen and paper in the workplace. More>>

Oil Searches: Norway's Statoil Quits Reinga Basin

Statoil, the Norwegian state-owned oil company, has given up oil and gas exploration in Northland's Reinga Basin, saying the probably of a find was 'too low'. More>>


Modern Living: Auckland Development Blowouts Reminiscent Of Run Up To GFC

The collapse of property developments in Auckland is "almost groundhog day" to the run-up of the global financial crisis in 2007/2008 as banks refuse to fund projects due to blowouts in construction and labour costs, says John Kensington, the author of KPMG's Financial Institutions Performance Survey. More>>


Health: New Zealand's First ‘No Sugary Drinks’ Logo Unveiled

New Zealand’s first “no sugary drinks logo” has been unveiled at an event in Wellington... It will empower communities around New Zealand to lift their health and wellbeing and send a clear message about the damage caused by too much sugar in our diets. More>>


Get More From Scoop

Search Scoop  
Powered by Vodafone
NZ independent news