MYOB IPO price set at $A3.65 a share

Accounting software firm MYOB is all set to launch onto the Australian stock exchange after raising near the maximum amount of money it had hoped for in its institutional bookbuild.

The bookbuild for its initial public offer closed yesterday with the final price set at $A3.65 a share, compared to its target range of $A3 to $A4 a share, giving it a market capitalisation of $A2.13 billion.

There were 228 million shares issued or sold under the offer, raising $A833.1 million. The IPO is set to be Australia’s biggest so far this year.

The Melbourne-based firm had hoped to raise total proceeds of between $A831.7 million and $A833.8 million to pay down debt, which stood at $A435 million at December 31. 

The majority owners of MYOB, Bain Capital, are not selling any shares but will reduce their stake to 58% from 95% through dilution following the issue of new shares.

The shares owned by the Boston-based private equity firm – which bought MYOB from Australian private equity firm Archer Capital for about $1.2 billion in 2011 – will be held on escrow after the offer until it releases its 2015 annual results next February.

Trading on the ASX is expected to start under the code MYO on Monday at midday, Sydney time.

Citigroup, Goldman Sachs, Merrill Lynch and UBS were joint lead managers on the offer, with Reunion Capital the financial adviser.

Unlike Wellington-based Xero, which is foregoing profits as it invests in growth with a focus on the US market, MYOB plans to pay a dividend within a year of it being listed, with a pay-out ratio of between 60% and 80%.

In the year to December, MYOB expects a pro forma annual net profit of $A45.4 million, which strips out one-off items, up from a pro forma historical result of $A28 million the previous year. Its statutory result for the year ending December forecasts a loss of $A43.9 million.

In a statement to the stock exchange, MYOB chairman Justin Milne said there was strong demand for the company’s shares from a range of investors, particularly in Australia and the US.

“We saw a significant level of participation from eligible retail noteholders in the offer, with approximately 57% of holders exchanging their notes into shares. We see this wide range of investor interest as a strong vote of confidence in MYOB.”

The company is focusing its research and development in the Australian and New Zealand markets.

Analysts believe MYOB’s launch onto the ASX is unlikely to weigh on the dual-listed rival Xero's [NZX: XRO] share price.

"It's been well-known and it's no surprise to the market that it is actually happening," Forsyth Barr analyst Blair Galpin says.

Meanwhile, the Australian Securities & Investments Commission is investigating whether Xero breached disclosure rules for not alerting the market its net loss had blown out by 96% to $69.5 million, despite this being 26% more than analysts’ consensus.

MYOB declined to comment on its competitor’s situation, or whether high-growth companies should be exempt from rules on informing the market about missing profit consensus.