Clues to Orion IPO pricing

Ian McCrae.

Recent issues of Orion Health Group shares to private investors provide clues to the issue price in its upcoming initial public offer. The Auckland developer of software systems for patient health management this week confirmed it would raise between $120 million-$150 million through floating on the NZX and ASX late next month.

A prospectus and investment statement are expected to be out next week and it's understood broker reports issued earlier this month had a wide ranging valuation on the company from between $550 million-$900 million.

The company has issued three lots of new shares this year, in June and August, with the shares priced on each occasion at $4 each. That price multiplied by Orion's total of 140,033,954, values the company at $550 million.

In the most recent placement in August, a further 1.28 million shares were issued with just over a million going to the Orion Health Corporate Trustee through its long-term staff share incentive plan.

In June, two placements were made - one for 1.37 million shares and the other for five million. It was a mixed bag with one shareholder selling out, another coming on, and one reshuffling under which entity his shares were held.

Orion Health founder and chief executive Ian McCrae remains the company's largest shareholder with a 58.4 per cent stake, with Pioneer Capital on 9.5 per cent, Canadian-based Geoffrey Cumming on 9.35 per cent, and one of Milford Asset Management's funds with 2.4 per cent.

There is expected to be strong demand for the long-heralded float, though that will inevitably rest on the final price and the company's growth prospects. There has been a pullback in what investors are prepared to pay for tech stocks, recently floated on the NZX, and there's a pipeline of prospects lining up for investors to choose from.

Orion Health's revenue has grown to $153 million in the year ended March 31, 2014, and it has a revised target of hitting $1 billion revenue by 2020.

The new capital from the IPO will go towards a renewed push into the United States and accelerating research and development.