ERoad, whose products allow transport companies to manage and pay road user charges and keep track of their fleet, is looking to raise up to $49.5 million in an initial public offer next month as it chases growth in the US market.
The Auckland-based company will sell between 13 million and 15.7 million shares at an indicative price range of $3 to $3.80 per share, of which $40 million will be new capital, with existing shareholders selling between 2.4 million and 2.5 million shares and keeping about three-quarters of the business, according to its prospectus lodged with the Companies Office. The indicative price range would value the company at between $180 million and $228 million.
The new capital will be used to pay off $3 million in bank financing and fund the company's expansion into the US, targeting Oregon, where it commercially launched in April. ERoad has also entered the Australian market. It might also look at new markets via acquisitions.
"ERoad's transition to a publicly-listed company represents the next step on its path to becoming a global technology leader," said chairman Michael Bushby in a letter to potential shareholders. "ERoad has a highly-scalable technology platform and robust business model, now supported by a further international reference site in the United States."
Founded in 2009, the company has developed GPS software and hardware which allows logistics companies to track their fleet and manage and pay road user charges.
The business first turned a profit of $2.9 million in the year ended March 31, 2014 on sales of $10 million. It forecasts revenue to rise to $19 million in the 2015 year and to $34 million the following year, 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. ERoad 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 anticipate paying dividends over the forecast horizon, with surplus funds kept "to capitalise on immediate and future market growth opportunities."
The final price is expected to be announced on July 29, with a listing on Aug. 15. The offer opens on July 30 with a preference pool closing on Aug. 6 and the broker firm offer closing on Aug. 12. The IPO won't have a public pool.
First NZ Capital is the sold lead manager of the offer and Deutsche Craigs is the co-manager.