MYOB's $A830m IPO: regulator raises disclosure concerns

MYOB's IPO has hit turbulence, with the Australian Securities & Investments Commission (ASIC) reportedly raising security concerns over the accounting software company's prospectus.

The move comes after Xero boss Rod Drury slammed the prospectus for being, as he say it, light on detail for investors.

Business Insider Australia quotes an ASIC spokesman saying "I can confirm in our review of MYOB’s prospectus, we have raised disclosure concerns but unfortunately I can’t go further into specifics."

ASIC and MYOB did not immediately return NBR's requests for comment. An MYOB spokesman did tell The Australian, "We are confident in the appropriateness of our disclosures, and would obviously in all cases work constructively with regulators to answer questions they may have. There is no change to the listing date as indicated in the prospectus [May 4.” [UPDATE: A spokeswoman for MYOB told NBR the company had nothing further to say.]

MYOB hopes to finalise its listing price on the ASX by the end of this month. The Melbourne-based company, which competes against Xero in Australia and NZ, hopes to raise up to $A830 million with its float, which would give it a market cap of $A2.3 million.

Mr Drury has been critical of MYOB's prospectus since in was released on April 1.

He says it's short on detail on customer numbers, and customer-related metrics.

This morning, he reiterated his concerns, telling NBR, "Our view is that for investors to be able to evaluate progress and risk MYOB should break out customer numbers and revenue by product and by country for the last three years.

"Xero is the Australian and New Zealand cloud leader and has been transparent with reporting so there are clear industry numbers for them to compare to. That will allow investors to see the progress they are making, evaluate their transition to the cloud, see the mix of growth by organic product and or acquisitions and determine whether those acquisitions were good long term decisions or just propping up short term revenue.

"We believe accounting software companies should be leading by example when it comes to financial reporting."

ASIC extended MYOB's prospectus exposure period by seven days, a period that will extend beyond April 13 when the broker offer is set to open. Should MYOB fail to address ASIC's concerns, the regulator's next step would be a stop order.

Beyond the kerfuffle over the prospectus, things seem to be going MYOB's way, according to a Friday report in the Australian Financial Review, which says shares are in demand "MYOB's retail brokers Bell Potter, UBS Wealth Management and JBWere have bid strongly for stock ahead of the $830 million float and their allocations have been scaled back. It's understood the brokers will receive less than two thirds of what they bid for," it says.

For discussion on MYOB and Xero customer numbers and valuations, see NBR's earlier story on MYOB's IPO. MYOB forwarded NBR a copy of its prospectus, which is discussed in that story, but note that under NZ and Australian securities law MYOB's prospectus can't be publicly available in NZ until after the exposure period ends on April 13.