UPDATE: Vista gains 8.5% on first day of trading, eyes emerging markets for growth
(Updates with chief executive comment, price movement)
By Suze Metherell
Aug. 11 (BusinessDesk) - Shares of Vista Group International rose as much as 8.1 percent on their NZX debut, after the cinema software and analytics company raised $92 million in an initial public offering to pay existing owners and fund global growth.
The shares recently traded at $2.53, touching a high of $2.54, after an IPO at $2.35, giving the company a market capitalisation of $201.9 million between Pacific Edge and Hallenstein Glasson Holdings. Some $51.7 million of the funds raised went to existing owners who retained a 47 percent stake, while $40 million in new capital was raised to drive its international growth plans.
Vista is the eighth company to list on the NZX this year as the local stock market enjoys a flurry of listings, particularly of tech firms. The Auckland-based company joins the ranks of Genesis Energy, the last of the government's partial privatisations, Intueri Education Group, the private education provider and Metro Performance Glass, New Zealand's largest glass maker, to make an even split between this year’s listings that are trading above their offer price and those that are trading below.
IkeGPS Group, which sells a range of portable measuring devices, and Scales Corp, the fruit packager and exporter, Gentrack Group, the utilities and airport software provider, and Serko, the travel booking system company, have slipped below their offer prices. Gentrack had initially traded above its $2.40 offer price, only to drop below after issuing a profit warning five weeks after listing.
"Mature investors need to get used to what happens in tech companies we don't make a thousand cans of baked beans a day to sell them," Murray Holdaway, founder and chief executive told BusinessDesk. "Earnings can be lumpy, people who are investing in these kind of companies have go to take a more mature approach."
Vista had gained on its debut because of it being "a tech stock with a good track record of profits and earnings and then I suppose to go with an interesting kiwi story becoming a world leader in an interesting industry of movies, and New Zealand does have a bit of a movie heritage thing going on, with the likes of Peter Jackson and Weta," he said.
Support had been strong from New Zealand insitutions, including the Accident Corporation Company, in the bookbuild, which Holdaway says was three-times oversubscribed.
The new capital will be used to repay debt and fund the acquisition of controlling stakes in two investments, Movio and MACCS, with about $15.4 million set aside for future acquisitions and developments, particularly in emerging markets, like Brazil, Russia, Indonesia and China.
"All of those newer markets, which is where the real growth is in cinema are a focus for us," Holdaway said. "You'll still expect to see a significant portion of our revenue come out of traditional markets like USA and Western European.
"The more spectacular growth will probably come from the analytics area and our software as a service in the small cinema area, those will be greater in percentage terms but because our core ticketing product is still quite a big percentage of earnings even small growth there, like single digit growth will produce us good-steady revenue growth," Holdaway said.
Unlike some other high-tech companies that are forecasting losses in a push for global growth, Vista expects to be profitable, though it has suspended its dividend plan for at least the next two years. Forecast revenue in the current financial year is expected to grow to $49.9 million and again to $61.5 million in the 2015 financial year, to produce forecast Ebitda of $13.2 million and net profit after tax of $8.1 million.
The freeze on dividend payments implies Vista will retain between $2.4 million and $4.05 million in 2015, which would have been set aside for investors based on a dividend policy of distributing between 30 percent and 50 percent of profit. The company's existing shareholders have been paid dividends of $10.4 million between 2009 and 2013 on profit of $18.5 million, and have taken another $3.5 million distribution for the 2014 year, which is forecast to deliver profit of $3.4 million.
"The reason is if you go into the market to raise money it does seem a little bit odd to just turnaround and pay it out again just for the sake of paying out dividends," Holdaway said. "Who knows what might happen but so we just said we'll have a two year hold on dividends which is also to match the current period in which all of the current management shareholders are escrowed, its just showing we're not taking money from the company at this stage."
Vista's debut will be followed by a NZ Alternative Index compliance listing by PushPay, the mobile payment app, on Thursday, ERoad, a logistics and fleet management company, due to float on Friday.