KEY POINTS:
Shares in New York software company Diligent Board Member Services listed today on the NZX at their issue price of $1.
The company raised $24 million in an Initial Public Offering (IPO) which represents 23 per cent of the company.
On the opening price, the company, which writes
and sells corporate governance software, will have a capitalisation of $140m.
It was just the fourth IPO on the NZX this year (excluding mutual funds). New Zealand has raised less than $200m in primary listings compared with 100 IPOs in Australia that has seen A$10 billion ($11.6b) raised.
Founded by New Zealander Brian Henry, Diligent moved its software division to Christchurch from New York after the September 11 attacks.
An unusual feature of the offer is a performance warranty offered by founding shareholders, who through DBMS LLC warrant would forfeit up to 20 per cent of their shareholding if licence fee projections contained in the company's prospectus are not met.
The company's product is a web-based service which provides board members instant access to board papers from any computer, anywhere, anytime.
Mr Henry, who has worked in the US for about 20 years, maintains a residence in Christchurch.
Proceeds from the IPO will fund the international expansion of Diligent's sales drive.
The company's growth to date has been based on a sales force of just one-to-two full time equivalents, and its business plan sees that expanding to 78 over the next two years.
It estimates less than 20 per cent of US companies used a web-based board portal and less than 5 per cent of those used an externally provided portal.
Mr Henry said ease of use and extremely strong security were the key selling points of the software.
The product was developed over three years following a request from AIG SunAmerica Funds, which was a client of Diligent's predecessor company, a New York based software development business.
The prospectus projects total revenue of US$5.8 million ($7.6 million) in 2008, which would then grow substantially in the next two years.
The company is chaired by Edward Charlton, a director of HSBC Private Bank in London. Three board members including Mr Henry, are US based and three are New Zealand based.
Mr Henry said New Zealand was the ideal market for Diligent to list on.
"Aside from personal ties, the expertise of our Christchurch team is perhaps the critical element in the company's ability to deliver its product offering."
Last week Diligent had to issue a statement distancing itself from Mr Henry's convicted fraudster brother Gerald Henry after the National Business Review published a story exposing his past.
Gerald Henry was bankrupted in New Zealand owing $55 million and spending a stint in a US jail for fraud.
Gerald Henry owned a number of failed companies in the 1980s including listed Energycorp, which owed $20 million when it failed in 1988. He was declared bankrupt in 1989 with debts of $55m and moved to the US.
NBR reported a Delaware court jailed him for four years eight months in 1996 after he was found guilty of fraud charges totalling US$1.3m ($1.7m).
Diligent said Gerald Henry had no beneficial or non-beneficial interest in the company and was not employed by it.
- NZPA
