Rakon makes stunning debut on sharemarket

Shares in Rakon, a manufacturer of Global Positioning Systems (GPS) for mobile phones and missiles, made a stunning debut on the New Zealand sharemarket today, listing at $2.20 - a 37.5 per cent premium to their $1.60 issue price.

In the first minutes of trading they rose even higher - hitting $2.25 - a 40 per cent premium.

At $2.25, the company has a market capitalisation of around $240 million.

Brokers yesterday were reporting some shareholders were last night offering to sell shares at between $1.80 and $2 on the unofficial "grey" market.

The $1.60 issue price gave the company a price-earnings ratio of 23 times prospective earnings against the sharemarket's average of around 13.

The company raised $66 million in an 41.25m share offering the promoters said was many times oversubscribed. Around 1800 investors were allocated shares who hold 39 per cent of the company.

The company forecasts sales to increase 24 per cent to $90.6m next year, according to the prospectus. That would boost net profit to $7.2m from $4.4m although that forecast was based on an exchange rate of US67c compared with today's level of US62c.

Jonathan Oram for IPO lead manager UBS New Zealand said the fall in the dollar would make a material difference. A one cent fall in the US dollar boosted profit by about $1m although imports of Japanese components meant that was offset by about a third from a similar sized fall of the kiwi against the yen.

Rakon, winner of last year's New Zealand Trade and Enterprise export awards, manufactures quartz crystals with a dominant share in the world market. US industrial defence giant Rockwell International uses them at the heart of its smart bombs and missiles.

Rakon sees huge potential for the crystals to used in the 500-600 million mobile phones and 70-80 million cars made each year.

Around 37 per cent of Rakon's sales are in North America.

The proceeds from the IPO will be used to expand production capacity and develop new products. The Mt Wellington-based Rakon already employs 500 staff and it plans to increase staff by around 30 as marketing and production are ramped up.

Ahuareka Trust representing founder Warren Robinson and Robinson Family interests have sold down 35 million shares.

The company was founded by Mr Robinson in an Auckland basement in 1967. It started developing crystals for electrical goods and expanded into electronics such as oscillators and GPS receivers.

The family trust retains a 22.6 per cent stake. Mr Robinson's sons Brent (managing director) and Darren (marketing director) have stakes of 9.3 per cent each.

Peter Maire, founder of the GPS receiver company Navman, would retain a 15.6 per cent stake, having bought 20 per cent in November.

Rakon will reinvest all profits and has no plans to pay dividends.

NZX head of products Geoff Brown said it was exciting to see well-established and innovative companies such as Rakon raising capital locally.

He said Rakon had helped elevate the profile of the New Zealand technology sector.

He said the high P/E ration showed New Zealand investors understood the type of business and the sector Rakon operates in - and they want to invest.

NZX today launched a SciTech Index.

- NZPA