Debt-free Gentrack would look at acquisitions up to $20M after IPO

UPDATED: Gentrack Group, the utility and airport software company going public next month, would look at acquisitions of up to $20 million to add compatible software or enter new markets after an initial public offering that will leave it debt free and allow the owners to sell down their holdings.

The Auckland-based company counts Genesis Energy, Meridian Energy, MightyRiverPower, Australia's Origin Energy and the UK's SembCorp Bournemouth Water among the electricity and water utility customers for its Gentrack Velocity billing product. Airport companies that use its  Airport 20/20 management system include Auckland International Airport, Sydney Airport, Hong Kong International Airport and John F Kennedy International Airport.

It competes with SAP and Oracle for utility billing systems and with Lockheed Martin, SITA and AirIT for airport systems, according to the prospectus released today. It plans to use existing earnings to expand into new countries and markets and has been monitoring some smaller companies as potential acquisition targets "for some time," executives said on a conference call.

"Given its strong balance sheet, Gentrack retains the ability to take on debt to fund acquisitions," the company said. That may include a billing company in the US, for example, and could be funded by a mix of cash and debt.

Gentrack took on debt to fund the $54 million management buyout in 2012 that resulted in chairman John Clifford and executive director James Docking each hold 21 percent of the company, which currently has a total of 21 shareholdings. The $33 million debt component of that transaction plus costs associated with the IPO will use all of the proceeds of the sale of new shares, about $36 million. After the IPO, the existing owners will hold between 41.5 percent and 43.5 percent of the company, receiving the balance of the up-to $101.8 million the sale will raise.

The shares will be offered at an indicative price range of $2 to $2.50, valuing the Auckland-based company at between $151.4 million and $180.2 million, according to Gentrack's prospectus. The offer will comprise 14.4 million to 18 million of new shares and 26.3 million of existing shares. The bookbuild, pricing and allocation will be determined on June 5 for an offer that will open on June 9 and close on June 20, ahead of an expected June 25 listing on the NZX and ASX.

Gentrack has an implied cash dividend yield of 1.4 percent to 1.7 percent for 2014, rising to 4.5 percent to 5.4 percent in 2015, according to the prospectus. According to its forecasts, revenue rises to $40.6 million in 2014 from $40.1 million in 2013, before climbing to $44.7 million in 2015. Net profit would be $3.7 million this year and $9.3 million in 2015.

(BusinessDesk)

EARLIER: Gentrack to raise up to $101.8m in IPO

Gentrack Group plans to raise as much as $101.8 million in an initial public offering next month, allowing existing owners to sell down their holdings and giving the utility and airport management software company funds to repay debt.

The shares will be offered at an indicative price range of $2 to $2.50, valuing the Auckland-based company at between $151.4 million and $180.2 million, according to Gentrack's prospectus. The offer will comprise 14.4 million to 18 million of new shares, raising $36 million, and 26.3 million of existing shares, raising between $52.6 million and $65.8 million.

The bookbuild, pricing and allocation will be determined on June 5 for an offer that will open on June 9 and close on June 20, ahead of an expected June 25 listing on the NZX and ASX.

After the IPO, the existing owners will hold between 41.5 percent and 43.5 percent of the company. Chairman John Clifford and executive director James Docking each hold 21 percent of the company, which has a total of 21 shareholdings.

The company’s two software products are Gentrack Velocity, a billing product for energy and water utilities, and airport management system Airport 20/20. The products had originally been developed by Talgentra, an Auckland-based company that was sold to Australian metering company Bayard and ANZ Capital in 2009.

Clifford and Docking, who has run the Gentrack business since 1995, teamed up to buy Talgentra in 2012. Gentrack has 150 utility and airport customers in 20 countries, and employs 180 people in offices in Auckland, Melbourne and London, according to its statement.

Sales in the 12 months ended Sept. 31, 2013, was $40 million, generating a profit of $6.6 million.

Gentrack has an implied cash dividend yield of 1.4 percent to 1.7 percent for 2014, rising to 4.5 percent to 5.4 percent in 2015, according to the prospectus. According to its forecasts, revenue rises to $40.6 million in 2014 from $40.1 million in 2013, before climbing to $44.7 million in 2015. Net profit would be $3.7 million this year and $9.3 million in 2015.

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(BusinessDesk)