Our 2019 Retail Offer, including a Discounted Rights Issue, is off to a good start.
The Offer for $23 shares closes on 20 November 2019, and the 1 for 7 $16 Rights Issue closes on the 25th of November.
So far we have $2.5 million in commitments for the Offer and Rights Issue:
- 40 investors have subscribed to the $23 Shares, which come with the attached 1 for 7 $16 Rights
- We have commitments from 321 investors, mostly, of course, for the Rights Issue
- The investors have, on average, over-subscribed to their entitled rights by an additional 44%.
Please read the Product Disclosure Statement (“PDS”) before making any investment decision. You can also take advice from a financial adviser to help you make any investment decision. The minimum investment is $2,300, and there is no maximum.
PDS Highlight: The Software as a Service Companies
We shifted the emphasis for this offer to highlight the 14 material companies that form 99% of the value of Punakaiki Fund’s investment assets. We are very happy with their aggregate performance, which resulted in last 12-month revenue of $124 million and around 800 people now employed at those companies.
Eight of those companies use the Software as a Service business model. The most well-known example of this in New Zealand is, of course, Xero. Punakaiki Fund’s Software as a Service portfolio companies as a group show total current recurring revenue of $75 million, and a growth rate of 31%.
To put that in context, back in 2014 Xero had a market valuation of over $2.2 billion, based on a recently reported recurring revenue of $70.6 million. That’s over 5.5 times the aggregate value that we hold the companies above at, reflecting a number of factors including size, liquidity, growth rates and more.
Xero just reported their annualised was NZ$764 million, as at 30 September 2019, and their revenues over the previous 12 months grew by 32% year on year.
Xero’s market capitalisation today is AU$10.5 billion, which is 14.8x times their recurring revenue.
Punakaiki Fund’s comparable multiple of aggregate recurring revenue over enterprise value, was just 5.2x for the valuation performed for this offer. We use company data to September 2019, but rather than using the annualised recurring revenue as at the reporting date we use the more conservative annualised average of the last three months revenue. The difference in the multiples compared to Xero’s is due to discounts we apply for private ownership, lack of liquidity, size and more.
PDS Highlight 2: Use of Funds
The table from the PDS below shows the proposed use of funds raised. We are very keen to invest both into the core 14 portfolio companies as well as new companies.
We have one firm obligation – 12% of capital raised will be used to purchase further shares in Devoli, at a buy-price originally set over two years ago. This process will eventually move our shareholding from the 48.8% currently to 53.9%. We are also talking to both Conqa and Weirdly about their funding requirements, and want to ensure they each have funds required to continue to expand.
We are, as always, spoiled for opportunity for new investments, but will be taking our time to make any investment decisions. We want to choose the best investments from the options available.
We are very happy to see that Stuff Fibre won several categories in the TUANZ Broadband Awards, including Broadband Provider of the Year. Stuff Fibre is powered by Devoli, and Devoli’s ability to make things simple for Stuff Fibre is a key factor in them taking out the award.