Christopher Adams

The Business Herald’s markets and banking reporter.

Jetpack IPO firing up

Investment in Martin Aircraft would be high-risk but its unique product could work in its favour: expert

Martin Aircraft says it has 40 pre-orders for its jetpacks.
Martin Aircraft says it has 40 pre-orders for its jetpacks.

Martin Aircraft, the New Zealand jetpack maker looking to raise about $20 million through a stock exchange listing, possibly this year, would be an extremely high-risk investment but its unique product could drive interest in the company's float, market sources say.

Read also:
Kiwi 'motorcycle in the sky' is revving up to jet away
Martin Jetpack: 'Quantum leap' over previous model
Jetpack firm plans IPO

The Christchurch-based firm has flagged listing intentions before, but its latest push at going public is gathering momentum.

The company is touting 40 pre-orders for its jetpacks, representing $6 million in sales, and has invited investors and brokers to a pre-initial public offering (IPO) briefing in Sydney next week.

The briefing will cover an update on the IPO and "details about the world's first public manned flight and the resulting global publicity", according to the firm's website.

Martin Aircraft has already raised about half of a $5 million pre-IPO funding round from "sophisticated" investors and is looking to raise roughly $20 million more through an IPO.

Close to $1 million of the pre-IPO funding would be spent on the production of five showcase jetpacks, according to the offer documents.

Marketing manager Christine Gooding said the timing and location of the listing was still being considered by the company's board.

See Martin supplied video "Martin Jetpack 'quantum leap over previous model':

Video


Herald app users tap here to view the video.

However, the Australian Financial Review reported that the firm was targeting a dual NZX/ASX listing in November.

Gooding said First Responder jetpacks - developed for police, search and rescue and other government uses - were set for release in 2015 and the firm was aiming to release its personal jetpacks, aimed at the leisure market, either late next year or in 2016.

The Martin Jetpack, named one of Time magazine's top 50 inventions for 2010, received Civil Aviation Authority approval for manned flight last year and governments and companies around the world have expressed interest in the technology.

The firm released its P12 prototype last year, which could fly as high as 1.5km, with a cruising speed of about 56 km/h and a top speed of 74 km/h.

James Smalley, of sharebrokers Hamilton Hindin Greene, said Martin Aircraft was "right up there" on the investment risk scale but its unique product offering could work in the firm's favour when it looked to carry out a listing.

"It's not just another IT company or a software company," Smalley said, referring to the flurry of software-related IPOs the New Zealand market has seen in recent months.

He said Martin Aircraft would be viewed as a speculative investment and would probably attract only experienced investors.

"I don't think anyone will go into that investment thinking it's going to be a solid, dividend-paying stock any time soon."

Until this year the market was taking a bullish approach to unprofitable firms with big promises of future profit, pushing the valuations of such companies to record levels.

But sentiment has taken a turn for the worse in recent months and there has been a global sell-off of growth-focused technology stocks.

Daniel Metcalfe, senior client adviser at sharebrokers OMF, said he was not surprised the company was pushing ahead with its listing plans despite the less than perfect market conditions.

"There's always opportunities for good companies," Metcalfe said. "[The Martin Jetpack] is very unique - they've got an actual tangible product."

In addition to the 40 pre-orders, the company has indicated it has a further potential $20 million worth of serious interest in its products.

The company also claims it has had more than 100,000 inquiries on its jetpacks, and says it has $42.9 million of potential pipeline orders, including serious inquiries from a Mexican Government agency worth up to $14.6 million, as well as from the United Arab Emirates and South African Governments and private companies in Australia, Canada, the United States and Jordan.

In the year ended March 31, 2013, the company reported a loss of $1.76 million, on $5206 of sales and $27,113 in other income, including New Zealand government grants, the offer documents show.

The jetpacks are expected to come with price tags in the range of US$150,000 ($177,644) to US$250,000.

The technology is the brainchild of Christchurch inventor Glenn Martin, who began the project in his garage in 1981.

At present Martin Aircraft's largest shareholder is Wellington-based No 8 Ventures, at 31 per cent, while Martin holds 28 per cent.

- additional reporting: BusinessDesk

- NZ Herald

© Copyright 2014, APN New Zealand Limited

Assembled by: (static) on red akl_a5 at 19 Sep 2014 19:26:03 Processing Time: 1110ms