Xero founders sell $5m of shares to institutions, MYOB founder

Rod Drury, founder of web-based accounting software company Xero. Photo / Mark Mitchell

Xero chief executive Rod Drury and two other founders have sold $5 million of shares to institutions and to Brad Shofer, who joins fellow MYOB founder Craig Winkler among the cloud-based accounting platform's top 20 investors.

Xero "facilitated on and off-market trades totaling $5 million after being approached by institutions and strategic investors," the company said in a statement today.

Some 1.8 million shares were sold at $2.75 apiece, the same price that Xero raised $20 million in a placement to major shareholders last week.

Along with Shofer, five new institutional investors have joined Xero's share register by buying the shares, US based Sophrosyne Capital LLC, Matrix Capital Management and three New Zealand funds.

"To enable these investors to participate without further dilution, founders Rod Drury, Hamish Edwards and Alistair Grigg have agreed to sell a small percentage of their shareholding," the company said. "There is no intention for the founders to sell down further in the foreseeable future."

The company plans to offer other shareholders on the register as at Feb. 14 the ability to subscribe for up to $15,000 of shares each, with share purchase plan documents to be sent out later this month.

At Xero's annual shareholders' meeting last year, Drury said the company had abandoned its target, given in 2009, of reaching break-even in 2011, "given the size of the opportunities available."

Shares in Xero fell about 1 per cent to $3.00 and have gained 9 per cent this year.