Debt-free Gentrack would look at acquisitions up to $20M
Debt-free Gentrack would look at acquisitions up to $20M after IPO
By Jonathan Underhill
May. 26 (BusinessDesk) - Gentrack Group, the utility and airport software company going public next month, would look at acquisitions of up to $20 million to add compatible software or enter new markets after an initial public offering that will leave it debt free and allow the owners to sell down their holdings.
The Auckland-based company counts
Genesis Energy, Meridian Energy, MightyRiverPower,
Australia's Origin Energy and the UK's SembCorp Bournemouth
Water among the electricity and water utility customers for
its Gentrack Velocity billing product. Airport companies
that use its Airport 20/20 management system include
Auckland International Airport, Sydney Airport, Hong Kong
International Airport and John F Kennedy International
Airport.
It competes with SAP and Oracle for utility
billing systems and with Lockheed Martin, SITA and AirIT for
airport systems, according to the prospectus released today.
It plans to use existing earnings to expand into new
countries and markets and has been monitoring some smaller
companies as potential acquisition targets "for some time,"
executives said on a conference call.
"Given its
strong balance sheet, Gentrack retains the ability to take
on debt to fund acquisitions," the company said. That may
include a billing company in the US, for example, and could
be funded by a mix of cash and debt.
Gentrack took on
debt to fund the $54 million management buyout in 2012 that
resulted in chairman John Clifford and executive director
James Docking each hold 21 percent of the company, which
currently has a total of 21 shareholdings. The $33 million
debt component of that transaction plus costs associated
with the IPO will use all of the proceeds of the sale of new
shares, about $36 million. After the IPO, the existing
owners will hold between 41.5 percent and 43.5 percent of
the company, receiving the balance of the up-to $101.8
million the sale will raise.
The shares will be
offered at an indicative price range of $2 to $2.50, valuing
the Auckland-based company at between $151.4 million and
$180.2 million, according to Gentrack's prospectus. The
offer will comprise 14.4 million to 18 million of new shares
and 26.3 million of existing shares. The bookbuild, pricing
and allocation will be determined on June 5 for an offer
that will open on June 9 and close on June 20, ahead of an
expected June 25 listing on the NZX and ASX.
Gentrack
has an implied cash dividend yield of 1.4 percent to 1.7
percent for 2014, rising to 4.5 percent to 5.4 percent in
2015, according to the prospectus. According to its
forecasts, revenue rises to $40.6 million in 2014 from $40.1
million in 2013, before climbing to $44.7 million in 2015.
Net profit would be $3.7 million this year and $9.3 million
in
2015.
(BusinessDesk)