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

 


UPDATE: ERoad shares climb as much as 13% in NZX debut

UPDATE: ERoad shares climb as much as 13% in NZX debut after $46 million IPO

(Updates with share price movement, broker and CEO comment)

By Suze Metherell

Aug. 15 (BusinessDesk) - Shares of ERoad, the logistics and fleet management company, climbed as much as 13 percent on its first day of trading on the NZX as a cautious market looked for tech-exposure from companies with solid track records.

The stock first traded at $3.32 and rose as high as $3.40 from its $3 offer price, the bottom of its indicative price range. It recently traded at $3.35, valuing the company at $201 million. Institutional investors picked up 70 percent of the 15.3 million shares on offer, which saw existing owners sell 2 million shares, or $6 million worth, to keep 75 percent stake in the company. There was no public pool.

ERoad is the ninth company to list on the bourse this year, and follows cinema software and analytics firm Vista International Group's debut on Monday, which has risen 11 percent to $2.60 since listing. The NZX has experienced a flurry of tech-based listings, which has been a mixed bag for investors, and ERoad's gain tips the balance in favour of recently listed stocks above their initial public offer price.

"Although it might be considered in the tech side of things, it's a business that fundamentally is relatively easy to understand as a lay person," said James Smalley, director at Hamilton Hindin Greene. "The market is taking a bit of a cautious approach, both these new listings, the Vista and ERoad, already established pretty good track records before they then came to the market - they're still at the growth stage, but they have pretty solid market share and existing, successful business models."

Among other recent listings Serko, the travel software booking business, and ikeGPS, the portable measuring app, have failed to trade above their offer price. The government's last partial privatisation, Genesis Energy, Intueri Education, the education providers, Metro Performance Glass, the glass manufacturer have all remained above their IPO prices. Gentrack Group, the airport and utility software firm, had initially traded above its offer price, but its share price dropped after it issued a profit warning, effectively cutting its earnings outlook by some 32 percent, five weeks after its public float.

"Some of these recent tech listings, which are a bit hard to get your head around, the market might be mispricing them at the moment," Smalley said. "It appears the market is much more in a risk-off scenario, though willing to support new listings on the market that have the track record behind them."

Chief executive Steven Newman said the gain was due in part to strong institutional support and "latent demand" from "heavy scaling" at the bookbuild.

"The large majority of the capital raised has come into the business," Newman said. "We're very focused about growing the business to the next stage, it's not an IPO where people are taking the money and runnning, we've really got a tiger by the tail and it's going to be fun to really start taking the business where it deserves to go."

As vehicles become more fuel efficient, there is a shift towards user-pays for road building and repairs from the traditional excise fuel tax, in the US and across the globe, something ERoad's technology would look to cash in on, Newman said. Of the $40 million in new capital raised, $3 million will go to repay bank debt, with the remaining cash used to fund ERoad's growth, particularly in the US, where it launched commercial services in Oregon in April.

"In terms of our existing business it allows us to grow those markets faster, particularly in Oregon, scaling up our sales activity there," Newman said. "On the new business side of it, it allows us to look at more opportunities in parallel and take on a bit more risk and when I mean risk, its more a time risk.

"Up to this point, with very limited resources, every opportunity that we've looked at we've needed to deliver something quickly, whereas now we can develop more of a pipeline of work - where some of those opportunities may be two years away, and others may be six."

The company has also said it will look at potential acquisitions to further expand and enter new markets.

Founded in 2000, ERoad says it was the first company to provide a nationwide GPS-based road user charge system in 2009. It first turned a profit of $2.9 million in the year ended March 31, 2014, on $10 million in sales. In its July prospectus it forecast revenue to rise to $19 million in 2015, and to $34 million in 2016, but expected to post a loss of $1 million in 2015, due to $2 million in listing costs, before returning to profit of $5.5 million in 2016.

The company doesn't intend to pay dividends in the near term, as it reinvests profit for growth, but long-term Newman did envision shareholders to be paid.

The sole lead manager for the offer was First NZ Capital, with Deutsche Craigs as co-manager.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Brewing: Lion To Buy Cult Upper Hutt Brewer Panhead

Lion - Beer, Spirits and Wine (NZ), New Zealand's biggest beer maker, has agreed to buy Panhead Custom Ales from the family of founder Mike Neilson, its second such purchase of a popular craft brewer after the acquisition of Dunedin-based Emerson's Brewing Co in 2012. More>>

ALSO:

Half Empty: Fonterra's 2017 Opening Forecast Below Expectations

Fonterra Cooperative Group raised its forecast farmgate milk payout for next season by less than expected as the world's largest dairy exporter predicts lower prices will crimp production and supply will pick up. The New Zealand dollar fell. More>>

ALSO:

Pest Control: Mouse Blitz Team Leaves For Antipodes

The Million Dollar Mouse project to rid Antipodes Island of mice is underway with the departure of a rodent eradication team to the remote nature reserve and World Heritage Area. More>>

Gongs Got: Canon Media Awards & NZ Radio Awards Happen

Radio NZ: RNZ website The Wireless, which is co-funded by NZ On Air, was named best website, while Toby Manhire and Toby Morris won the best opinion general writing section for their weekly column on rnz.co.nz and Tess McClure won the best junior feature writer section. More>>

ALSO:

Pre-Budget: Debt Focus Risks Losing Opportunity To Stoke Economy

The Treasury is likely to upgrade its forecasts for economic growth in Budget 2016 next week but Finance Minister Bill English has already signalled that more of his focus is on debt repayment than on fiscal stimulus or tax cuts... More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news