Sydney tech investor buys Genie

By ADAM GIFFORD

Private Sydney technology investor Smarter Capital has bought the assets and business of Auckland e-commerce software maker Genie Systems.

Genie directors called in the receivers on October 1 when it became clear the business had overstretched itself investing in the United States market, and it could not raise new venture capital.

Smarter Capital managing director Marcus Cake said the way the receivership was handled by receivers McCallum Petterson, and the quick sale, meant the value of the business was retained.

"It kept uncertainty down. Customers are happy and we retained staff," he said.

Genie cut staff from 53 to about 30 this year as the extent of its predicament became clear.

Almost all its sales staff had left before the receivership, but it retained its core development and support staff, as well as founder and chief technology officer Peter Garden and chief executive Mike Hendry. Mr Cake said 20 other staff had been offered jobs in the new business.

The company did not lose any customers through the period.

Genie had about 15 enterprise customers, including Toys 'R' Us in the US and Singapore engineering giant Keppel Fels.

There are several large New Zealand customers. Unfortunately, because of the secrecy which blights the New Zealand corporate environment, most refuse to disclose they are using the software, as they think it gives them competitive advantage.

Mr Cake said Smarter Capital was not a venture capitalist but a $A10 million ($12.25 million) direct investor which concentrated on firms making enterprise software.

"It will have more than enough money to expand the business. We also have relationships with Australian venture capital funds, so if Genie needs bigger licks of capital I can get it," Mr Cake said.

He refused to say who was behind Smarter Capital or other companies it had invested in. But the Herald believes it is connected to Steve Killelea, the chief executive and major shareholder of listed Australian technology company Integrated Research, the largest supplier of systems and application management solutions for Compaq NonStop Himalaya (Tandem) systems.

Mr Cake said Smarter Capital could call on the experience of software industry executives familiar with taking products international, and who were willing to serve on an advisory board.

Genie's growth would be "organic and sensible, and we're only interested in profitable customers".

He said the company would be rebranded after a strategic review, which would also determine research and development priorities.

"The Genie name is unlikely to survive," Mr Cake said.

He also intends to establish an employee share ownership scheme. The old Genie Systems had been majority owned by directors, staff and their associates, with a smaller block of shares owned by companies associated with listed venture capital investor Strathmore Group.

Mr Garden said Genie's flagship OrderWare product was now reasonably mature, meaning it could be configured to meet the needs of most customers, rather than needing excessive customisation.

Receiver Bruce McCallum said the purchase price was confidential and would not be revealed in the receiver's report when it was issued.

"It was enough to satisfy the first and second debenture holders and the preferential creditors, the employees, but not the third debenture holder nor Inland Revenue."

Strathmore chief executive Phil Norman said Genie's receivership reflected the difficulty New Zealand firms had cracking the US market.