Christopher Adams ' Opinion

The Business Herald’s markets and banking reporter.

Stocktakes: PowerbyProxi IPO plans pulled?

1 comment
PowerbyProxi chief executive Greg Cross says he's working with existing investors to settle on the best strategy for the company. Photo / Dean Purcell
PowerbyProxi chief executive Greg Cross says he's working with existing investors to settle on the best strategy for the company. Photo / Dean Purcell

Wireless charging technology maker PowerbyProxi has shelved its plans to list on the NZX this year, according to a market source.

But Greg Cross, the Auckland-based company's chief executive, says the firm is still looking to raise growth funding and considering all the capital raising options it has available.

PowerbyProxi - whose charging systems are used for a range of applications, including Samsung smartphones - never officially announced its intentions to carry out an initial public offering (IPO).

However, the company has been engaging with investment bankers behind the scenes and entertaining fund managers at its College Hill headquarters to gauge market interest in a possible float.

Last month Cross said the company would carry out a $30 million to $40 million capital raising this year, possibly through an NZX listing. The proceeds would fund expansion including a dramatic increase in the size of its engineering team.

The market source says the tech firm pulled its listing plans after it became clear a stock exchange float wasn't going to provide a high enough valuation.

"I think the price they were looking for was probably higher than what everyone in the market thought would be acceptable."

Other market sources had not heard of the company ditching its listing plans but noted that it had gone a bit quiet on the PowerbyProxi front recently.

Cross says he's working with existing investors to settle on "the best strategy for the company going forward".

He has previously indicated that the company could raise the cash it requires from Asian venture capital firms, rather than an IPO.

Asked if the likelihood of a listing had decreased, Cross says: "We never said we were going to [IPO] or said we weren't going to. I was always very clear that it was one of the options we were considering."

Existing shareholders in PowerbyProxi, which was spun out of the University of Auckland about six years ago, include Cross, co-founder Fady Mishriki and Auckland business incubator The Icehouse.


TOUGH MARKET

Investor demand for growth-focused companies like PowerbyProxi has gone south in recent months and the NZX might not see as many tech listings this year as previously expected.

Shares in technology developers Serko and ikeGPS have fallen below their offer prices since the companies listed last month and this week, respectively.

Both firms are chasing growth in lieu of profits and while investors were taking a bullish approach to such businesses up until a few months ago, the euphoria has now well and truly subsided.

That drop in sentiment has wiped huge amounts of value off the market capitalisations of NZX-listed firms such as online accounting software provider Xero, security software developer Wynyard Group and biotech company Pacific Edge.

Shareholders in GeoOP, whose software allows mobile businesses to manage their workforce, have been on a hell of a ride since the company floated last October. Its shares, which were issued at $1 in a massively oversubscribed private placement prior to the listing and first traded at $2.40, surged to a record high of $3.64 in November but have nosedived since then and closed at 80c last night.

Salt Funds Management managing director Paul Harrison says the disappointing post-float performances of Serko and ikeGPS have been a "reality check" for the market.

"I would agree that there will be fewer listings than what we might have seen had the euphoria continued," Harrison says.

A number of other companies, mostly from the tech sector, have been tipped to list this year, including Orion Health, Fronde, Wherescape, TripleJump and CricHQ.

Meanwhile, Christchurch-based fruit marketer Scales Corporation will debut on the NZX this morning at $1.60 a share.


PICK AND CHOOSE

The market is making a clear definition between loss-making, high-risk technology firms and their more well-established, profitable counterparts.

Shares in software developer Gentrack, which is turning profits and listed one day after Serko, have gained 6.25 per cent from their $2.40 issue price to close at $2.55 last night.

Medical device maker Fisher & Paykel Healthcare, which is very much growth-focused but also posting record profits, hit an all-time high of $4.87 last month and has gained about 20 per cent this year.

These market dynamics bode well for software developers Vista Group and Eroad, which are expected to list next month.

Vista, which was founded in 1996 and develops IT systems used by cinema operators, has forecast an $8.1 million profit for the 2015 financial year.

Eroad, whose software is used by transport fleet operators, has indicated that it is already profitable but listing costs will result in a $1 million loss in the year to March 2015. A $5.5 million profit is forecast for the following year.


PUSHING AHEAD

Mobile payments technology developer Pushpay says it hasn't been allocated a listing date but still expects to carry out a compliance listing on the NZAX alternative market this month.

In June the company said it would raise $9 million through a private share issue at $1 a share - which would value the firm at $50 million - prior to the listing.

Pushpay head of communications Aaron Bhatnagar said this week that the share issue had been successfully completed, taking the company's total funding to $15.6 million.

The issue was oversubscribed and subject to scaling, he adds.

Bhatnagar says the firm - whose technology is used by businesses, non-profit organisations and churches - now has 98 shareholders on its register.

"Pushpay is seeking an NZAX compliance listing and is in the process of submitting various documents to the NZX for approval," he says. "We do not have a fixed date for listing, but we expect to list this month."

Pushpay founder Chris Heaslip has said the pre-listing capital raising would fund the company's global expansion, particularly in the United States.

"We are growing rapidly with transaction volume increasing 20 per cent month-on-month and current annualised payments volume at over $35 million, up from $17 million in late February 2014."

- NZ Herald

Christopher Adams

The Business Herald’s markets and banking reporter.

A business journalist for more than four years, he also writes the weekly Stock Takes column.Christopher’s main focus is the local sharemarket and issues facing Kiwi investors. He covered manufacturing and retail in his previous Herald role and maintains a special interest in New Zealand’s growing trade relationship with China.

Read more by Christopher Adams

Have your say

We aim to have healthy debate. But we won't publish comments that abuse others. View commenting guidelines.

1200 characters left

Sort by
  • Oldest

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a1 at 23 Sep 2014 23:49:22 Processing Time: 563ms