IkeGPS shares first trade at $1, shedding 9.1% vs. IPO price
IkeGPS shares first trade at $1, shedding 9.1% from IPO price
By Suze Metherell
July 23 (BusinessDesk) - Shares of IkeGPS Group fell 9.1 percent in their NZX debut after the portable measuring devices maker raised $25 million in new capital to build a sales force and develop its products.
The shares first traded at $1, compared to its initial public offer price of $1.10, valuing the company at $50.1 million. The Wellington-based company sold 22.7 million new shares, bringing the total on issue to about 50 million, after withdrawing plans for existing shareholders, which include Jenny Morel’s No 8 Ventures and business partner General Electric, to sell $6 million of existing shares. There was no public pool.
IkeGPS is forecasting a three-fold increase in revenue to $6.5 million this financial year, rising to $14.3 million in 2016, largely due to a growth in GE MapSight product sales, while its net loss will widen 133 percent to $5.33 million this year, and further to a loss of $5.8 million in 2016, according to its prospectus. Expenses are set to triple this year to $11.5 million and grow further to $19.6 million in 2016.
"Ike is currently a loss-making business that is not anticipated to make a net profit in the prospective period as the business invests in growth," the company said in its offer documents. "Although Ike has been operating since April 2003, it is only recently that Ike's current business model has been developed so investors should treat Ike as an early-stage growth company."
GE, which Companies Office records show holds a 5.9 percent stake in the company, agreed to sell IkeGPS's electricity market asset management product as the GE-branded MapSight. The US market for the MapSight could be worth US$700 million. While its Spike measuring product, which employs laser, camera and software in a mobile phone will be targeted at the architecture, engineering and construction sectors.
IkeGPS developed the products with US Army Corps of Engineers, US intelligence agency developer IN-Q-Tel and software providers for electricity units. The company expects to ship 289 MapSight units this year, and a further 626 in 2016, while Spike unit shipped will rise to 2,533 this year and 2,712 the following year.
"Ike's target markets are larges, its current penetration is low and the business is highly scalable due to a business model that features high gross margins and low marginal cost of sales," the company said.
The company expects to grow its staff to 84 people by 2016, from 59 this year, of which almost two-thirds will be New Zealand-based while the rest will be in the US.