WELLINGTON - Baycorp in the past two years has transformed itself from trier to a market star with high-tech pretensions, sending its stock price rocketing 330 per cent.
Then along came the Receivables Management Group, a conglomeration of 16 companies from both sides of the Tasman, and backed by Auckland entrepreneur Eric Watson.
The announcement came around the same time that the Nasdaq tech index in the United States started to tumble, taking the shine off Baycorp's halo.
While some investors' confidence in Baycorp may have waned, the business is still going strong and is excited about its future, with big plans under way.
"We're very positive about the New Zealand market and we believe that there are significant opportunities here for us," said Baycorp's strategy manager, Paul Stewart.
"We're focusing on what other products and services we can deliver to the New Zealand business market, and some of those that we can take to the wider consumer market."
Baycorp has come a long way since 1956, when a Lower Hutt husband and wife started a debt collection, which evolved into a local, then a regional and then a national debt collection company.
It is now an international credit services and technology company with more than 30,000 customers and revenue worth about $60 million.
And it is only getting better.
Mr Stewart said Baycorp's ability to stay at the forefront of evolving technology had been critical to success.
It had sustained 20 per cent-plus growth in both revenue and earnings for the past six years, and the company expected that trend to continue into the foreseeable future.
"We're still experiencing significant growth in the New Zealand market and that's a result of our products and services penetrating into a wider range within the New Zealand business sector," said Mr Stewart.
"Also we're bringing on new products and services which complement the core business of Baycorp."
He said the company had moved from being a debt collection and credit information company a few years ago to expanding its whole range of credit, business and financial services.
That had occurred particularly on the data side, where the company provided access to a wide range of credit-related data, rather than just credit reports as it had in the past.
The range included Auto-check Plus - a "credit check on a vehicle," which also gave registered specification numbers, an estimation of wholesale and retail value of the vehicle and its ownership history.
"That's just an example of the way the product and service base of Baycorp is being expanded," said Mr Stewart.
"Moving into the future, that will proliferate a whole range of products and services around our database."
Baycorp had also moved into the digital certification and internet encryption technology market after acquiring the company 128i in February.
The sorts of core competencies in 128i were similar to Baycorp's information businesses, Mr Stewart said.
"It's about providing verification of individuals, managing databases, having smart technologies and those sorts of things.
"It's about being the custodian of very sensitive and confidential information, a trusted third party.
"That's the business that Baycorp has been in through its credit information services and it's a logical extension to move into this area."
The company is also spreading its wings outside Australasia.
Two months ago it formed a 50-50 joint venture with a subsidiary of Singapore Exchange-listed Keppel Telecommunications and Transport to service the online credit and business information market throughout the Asia-Pacific region.
The joint company, BizInfo Asia Pacific, will provide financial risk management solutions, company analysis and data and online credit reporting systems, allowing Baycorp to license its New Zealand-designed technology.
Mr Stewart said the launch into Asia was progressing well, with the partners now looking at how it should roll out its services in Singapore.
"We're also well advanced in terms of other countries in Asia." He mentioned Malaysia, and said the company was also looking closely at Thailand and the Philippines.
"There's substantial opportunities for the company in that part of the world.
"The timing's absolutely right and we've got to make sure we get it right so we're charting a careful course."
But some things are outside the company's control.
Its share price climbed steadily upwards after it listed on the Stock Exchange at $2 in February 1997, peaking at $11.30 at the beginning of April.
However, it slumped to $10.30 on April 26, when reports were published saying Mr Watson was thought to be behind Frontier.
And it sank to as low as $8.36, on May 12.
The share price has since inched its way back up to hover between $9.20 and $9.45 this month, but Mr Stewart said Baycorp was not concerned about the share price volatility.
"As a company we don't tend to focus on the share price," he said.
"We focus on the business, ensuring that it's profitable over the long term and that it's providing the sorts of competitive services to the market that are necessary.
"So in context of what's happened internationally with technology stocks and the like, it's not a major drop.
"We're certainly positive about the company's prospects in both the short and the longer term, and ultimately that will determine the company's share price over that period."
Baycorp certainly has no self-esteem problems, and while it was "obviously very interested" in the Receivables Management Group, it did not feel at all threatened, Mr Stewart said.
"It's not a new competitor. It's really a consolidation of existing competitors in the market.
"The consolidation and rationalisation of the industry is probably well overdue - to see this sort of initiative is not surprising.
"They're adopting a business model which is probably closer to Baycorp's than it was previously, but we think that Baycorp is extremely well positioned to meet any challenges they may throw at us. No major frighteners on that front."
Ord Minnett analyst Blair Tallott agreed that Baycorp had little cause of concern, saying RMG would have a difficult task growing its business in New Zealand.
It would be challenging for RMG to bring together the 16 businesses, identifying difficulties in technology, management and client combinations, he said.
"We expect the overall impact on [Baycorp] to be minimal - that is, under 10 per cent loss in New Zealand market share, which is less than $1 million ebit [earning before interest and tax]."
There could be margin pressure on Baycorp but it was focusing on servicing and value-added issues rather than price, said Mr Tallott.
Baycorp had the major banks as its key customers in New Zealand and they had supported its move to Australia.
Another Baycorp strength was its credit information database, which Mr Tallott said had taken years to develop and would be difficult to replicate.
Mr Stewart said Baycorp thought the RMG initiative was partly in response to its own move into Australia, where it was looking at providing a value-added solution to the client, particularly to the key credit providers in the Australian market.
Baycorp's listing on the Australian stock exchange had been very successful for the company, and it had more Australian shareholders than any other New Zealand-listed company.
However, Mr Stewart said Baycorp had no plans to follow Lion Nathan and Nufarm and skip across the Tasman
"We're a New Zealand company but we do have activities through Australasia, and from an investment perspective we're a New Zealand company which is attractive to offshore investors, and to have a listing in Australia was just another means by which we could readily access the Baycorp script."
- NZPA
Baycorp bouncing back from sharemarket blow
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