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


Serko seeks up to $22 mln in IPO to fund growth

Serko seeks up to $22 mln in IPO to fund growth plans across Asia Pacific

By Paul McBeth

May. 26 (BusinessDesk) - Serko, the online business travel booking company, is seeking up to $22 million in an initial public offer, which it will use to fund growth aspirations across the Asia Pacific region

The Auckland-based company will sell 15.5 million new shares at $1.10 apiece, raising some $17 million, and a further 4.5 million existing shares worth $5 million will be sold into the offer as part of a main board listing on the NZX.

The offer will have a retail component, and open on June 4, closing on June 19, with a listing expected on June 24. Founders Darrin Grafton and Bob Shaw will each retain about 20 percent and have agreed not to sell any more shares until ,two days after Serko announces its 2016 annual result.

Of the $17 million raised, $11.3 million will be held to fund capital initiatives and pay for the $438,000 cost of the IPO, $3.4 million will repay bank debt and $2.3 million will repay shareholder loans, according to its prospectus lodged with the Companies Office. Serko forecasts net cash of $9.9 million at next month's listing, and anticipates spending $2.4 million in the current financial year and $2.5 million in the first half of the 2016 financial year.

Serko is the first of two software companies announcing NZX listings today, a trend that's been growing on the local bourse as investors become more comfortable with the strategy of eschewing short-term profits in the hope of grabbing larger market share. Xero, which develops cloud-based accounting software, has been the pin-up child for the strategy, raising $180 million to fund a push into the US.

Chief executive Darren Grafton name-checked Xero several times during a media briefing in Auckland, saying Serko's use of travel agencies as a reseller of its software was similar to Xero's use of accountants. Five travel management companies accounted for 70 percent of Serko's revenue in the year ended March 31.

The software-as-a-service company is forecasting losses for its 18-month forecast horizon, but chairman Simon Botherway said he doesn't anticipate raising more funds with Serko expected to be operationally cash-flow positive by the end of 2016.

"We anticipate that we won't have to come back to market," Botherway said. "We're not out there in the never-never with endless calls on capital."

Had Serko been chasing immediate profits it would have missed out on the existing growth opportunities in Asia, he said.

Serko forecasts a net loss of $6.6 million in the 12 months ending March 31 next year, from a loss of $1.7 million in 2014, and a first-half loss of $2.5 million the following year. Revenue is seen climbing 53 percent to $11 million in 2015, with sales of $8.3 million in the six months ending Sept. 30, 2015.

Botherway said the initial plan is to focus on growing in the Asia Pacific, though the company is investigating expanding into other regions.

Serko generates revenue by providing customers and travel agencies greater control over their travel budgets to improve efficiency. Travel accounts for between 8 percent and 12 percent of corporate budgets, it said.


© 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