Proposed range up to $3.80 but final pricing values firm at $180 million, raising $40 million in new capital.
Eroad chief executive Steven Newman admits market conditions for new technology listings have taken a turn for the worse but the company is happy with the final pricing of its initial public offering coming in at the bottom of the indicative range.
Shares in the Auckland-based firm have been priced at $3 - out of a proposed range of $3 to $3.80 - and existing shareholders have sold less of their holdings in the developer of technology used by transportation operators to manage and pay road user charges, as well as for tracking fleets.
The final pricing values Eroad at $180 million and the offer will raise $40 million in new capital, which the company will use to chase growth in the United States.
Investor appetite for high-growth tech companies has gone south in recent months, wiping huge amounts of value off local tech stocks including Xero, Pacific Edge and GeoOP. Shares in technology developers Serko and ikeGPS have fallen below their offer prices since the companies listed last month and last week, respectively.
"Market conditions were definitely better a year ago [but] we're running to our own plan," Newman said. "There definitely is turmoil in the market."
He said a "nice surprise" for the company was the strong support its offer received from institutional investors, who "get" the Eroad story.
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 per cent of the shares and there is no public pool.
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 August 12, ahead of an expected listing on the NZX on August 15.
Founded in 2009, Eroad was the first company to provide a nationwide GPS-based road user charge system. It first turned a profit of $2.9 million in the year ended March 31, 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 it will 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.
- Additional reporting BusinessDesk