Eroad IPO price set at $3-a-share, toward bottom of indicative range

Software firm Eroad is seeking $46.1 million in an initial public offer priced at $3-a-share, the company confirmed this morning.

Based on the final offer price, Eroad will have a market capitalisation of $180 million on listing.

The company develops products that allow transport companies to manage and pay road user charges and keep track of their fleet.

The final price per share was set at the bottom of the indicative range and exosting shareholders have sold less of their shareholding than initially flagged in the prospecus.

Eroad chief executive Steven Newman says the overall response from institutions from New Zealand and Australia and from NZX Firms was "extremely positive".

Institutional investors have been allocated slightly over 70% of the offer.

“Investors have been impressed by Eroad’s proven track record of significant growth in customer numbers, our move into profitability, and our substantial opportunities in North America,” says Mr Newman.

“Achieving an NZX Main Board listing will increase transparency and credibility with government regulators in its markets and enhance Eroad’s profile with customers.”

The offer comprises $40 million of new capital and a secondary offer of $6.1 million.

Eroad is selling 13.3 million new shares, with existing owners selling 2 million shares, fewer than the 2.4 million to 2.5 million initially discussed. CEO Steven Newman is the largest current shareholder in Eroad.

The offer opens on July 30 with the Broker Firm Offer closing on August 12. Shares are expected to begin trading on the NZX Main Board on August 15.

First NZ Capital is the sole lead manager for the offer with Deutsche Craigs co-manager. There is no public pool.

Founded in 2009, ERoad was the first company to provide a nationwide GPS-based road user charge system, according to information released by the company. 

It first turned a profit of $2.9 million in the year ended March 31, 2014, on sales of $10 million and forecasts revenue to rise to $19 million in 2015 and to $34 million in 2016, according to the prospectus.

Eroad expects to report a loss of $1 million in 2015 due to listing costs of $2 million, before returning to profit of $5.5 million in 2016. 

The company doesn't intend to pay dividends in the near term.

The sole lead manager for the offer is First NZ Capital, and Deutsche Craigs is the co-manager. 

The local stock market is experiencing a flurry of listings after it got a shot in the arm from the government's partial privatisations last year. 

Last week, ikeGPS Group, which sells a range of portable measuring devices, and Scales Corp, the fruit packager and exporter, debuted on the NZX, and Metro Performance Glass, New Zealand's largest glass maker, is due tomorrow. Last month, Gentrack Group, the utilities and airport software provider, and Serko, the travel booking system company, debuted. Others in the pipeline include Vista Group International, a cinema ticketing and data analytics firm.

dbridgeman@nbr.co.nz