Xero raises $15m but falls short of $18m target

By NZPA

Friday 1st June 2007

Accounting software company Xero Live said today its IPO (initial public offering) had raised the minimum $15 million it had been seeking but fell short of the $18m it had hoped to raise.

There was a provision to accept $3m in oversubscriptions but this did not eventuate. The shares were valued at $1 each.

There was some scaling of larger applications, chairman Phil Norman, said.

The stock would have 1167 shareholders. Founders Rod Drury and Hamish Edwards now have 45% and 13% stakes respectively in the company.

No existing shares were sold in the offer.

Xero Live is a web-based accounting software product aimed at small-to-medium-sized businesses. The capital would be used to establish the business in New Zealand, do market research and take the first steps towards setting up sales and marketing teams in Australia and Britain.

Scott St John, chief executive of backing broker First NZ Capital said it was pleasing to see that the New Zealand investment market supporting early stage ventures such as Xero.

"Hopefully, this IPO will act as a catalyst for more New Zealand companies to experience the benefits of a public listing and a broad investor base."

There has been a dearth of IPOs on the stock exchange in the 2000s and Xero will be the first solely New Zealand float on the stock exchange this year when it lists on Tuesday.

The Wellington company is the brainchild of software entrepreneur Drury --- who last year sold his email storage company AfterMail to US software maker Quest for more than $60 million.

Drury - who will be Xero's chief executive - said that until now the company had been putting its resources into building the product and proving it worked. Graham Shaw, Guy Haddleton and Trade Me founder Sam Morgan, are the other independent directors on Xero's board.

The independent directors agreed to invest $1.35m, strategic partners and other investors took another $5m.

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