Tuesday 29th July 2014
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Shares of ERoad have been priced at $3 apiece, the bottom of its proposed range, and existing owners sold less of their holdings as the logistics and fleet management company raises $40 million in new capital to chase growth in the US.
The Auckland-based company will sell 13.3 million new shares, and existing owners will sell 2 million shares, fewer than the 2.4 million to 2.5 million flagged in the prospectus. Institutional investors will pick up 70 percent of the shares, which had been marketed in a range of $3 to $3.80. There is no public pool for next month's initial public offering, which gives the company an implied market capitalisation of $180 million.
Of the $40 million in new capital, $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. The company has said it will look at potential acquisitions to further expand and enter new markets. ERoad's broker firm offer opens tomorrow and runs through to Aug. 12, ahead of an expected listing on the NZX on Aug. 15.
"ERoad achieving an NZX main board listing will increase transparency and credibility with government regulators in its markets and enhance Eroad's profile with customers," chief executive Steven Newman said in a statement.
Founded in 2009, ERoad was the first company to provide a nationwide GPS-based road user charge system, according to information released by the company. It first turned a profit of $2.9 million in the year ended March 31, 2014, on sales of $10 million and forecasts revenue to rise to $19 million in 2015 and to $34 million in 2016, according to the prospectus. Eroad expects to report a loss of $1 million in 2015 due to listing costs of $2 million, before returning to profit of $5.5 million in 2016. It is also predicting a drop in its retention rate, from 99.3 percent to 96.5 percent over the next two years.
The company doesn't intend to pay dividends in the near term.
The local stock market is experiencing a flurry of listings after it got a shot in the arm from the government's partial privatisations last year. Last week, ikeGPS Group, which sells a range of portable measuring devices, and Scales Corp, the fruit packager and exporter, debuted on the NZX, and Metro Performance Glass, New Zealand's largest glass maker, is due tomorrow. Last month, Gentrack Group, the utilities and airport software provider, and Serko, the travel booking system company, debuted. Others in the pipeline include Vista Group International, a cinema ticketing and data analytics firm.
The sole lead manager for the offer is First NZ Capital, and Deutsche Craigs is the co-manager.
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