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Home / Business / Markets / Shares

Vista prices shares for IPO

BusinessDesk
17 Jul, 2014 01:27 AM4 mins to read

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Vista Entertainment chief executive, Murray Holdaway.

Vista Entertainment chief executive, Murray Holdaway.

Shares of Vista Group International will sell for $2.35, towards the lower end of the indicated price range, as the cinema software developer and film distribution company looks to raise up to $40 million of new capital in a drive for international growth.

The company will sell 58 million new shares and the existing owners will sell down 22 million of their own, to retain a 47 percent stake, taking the total capital raise to $92 million after the price was set in a bookbuild process for institutional investors and retail broking firms, Auckland-based Vista said in a statement. The price is towards the middle of the $2.10 to $2.70 price range given in the prospectus earlier this month. It gives the company a market capitalisation of $188 million, valuing it about the 60th biggest company on the NZX All Index.

"At this price, the offer was more than two times covered - showing a strong level of support from investors," chairman Kirk Senior said. "In particular, they have demonstrated confidence in our management team and our strategy to become a broader global film industry software company."

Of the $40 million in new funds raised, Vista intends to spend $9.3 million exercising an option to acquire a further 25 percent stake in MACCs, giving it 50 percent of the largest provider of movie distribution software outside the US. Vista will also spend $4 million to take the remaining 43 percent stake in Virtual Concepts, which owns Movio, a marketing data and campaign management platform for cinemas, and has set aside a provision of $4.6 million if the company meets earn-out targets.

Some $2.6 million of new capital will be spent on Numero, a new venture in the data analytics field, and $3.9 million on offer expenses.

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Unlike some other high-tech companies that are forecasting losses in a push for global growth, Vista expects to be profitable, though it doesn't plan to pay any dividends for at least the next two years.

"The group has a history of paying dividends, however at this stage we do not intend to pay a dividend until at least 2016 as we focus our capital on accelerating our software and data analytics growth within the film industry," chairman Kirk Senior said in a letter to investors in the company's prospectus.

The freeze on dividend payments implies Vista will retain between $2.4 million and $4.05 million in 2015, which would have been set aside for investors based on a dividend policy of distributing between 30 percent and 50 percent of profit. The company's existing shareholders have been paid dividends of $10.4 million between 2009 and 2013 on profit of $18.5 million, and have taken another $3.5 million distribution for the 2014 year, which is forecast to deliver profit of $3.4 million.

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The prospectus shows Vista's recurring revenues have doubled since 2009, with turnover in the 2013 financial year standing at $38.7 million to produce earnings before interest, tax, depreciation and amortisation of almost $9 million. Forecast revenues in the current financial year are expected to grow to $49.9 million and again to $61.5 million in the 2015 financial year, to produce forecast Ebitda of $13.2 million and net profit after tax of $8.1 million.

The local stock market is experiencing a flurry of listings after it got a shot in the arm from the government's partial privatisation last year. Last month, Gentrack Group, the utilities and airport software provider, and Serko, the travel booking system company, debuted. Next week, IkeGPS Group, which sells a range of portable measuring devices, is due to list. Other upcoming July listings include Scales Corp, the fruit packager and exporter, and Metro Performance Glass, New Zealand's largest glass maker.

The retail offer opens today and runs through to Aug 1, with Vista expecting to debut on the NZX on Aug 11.

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