Xero directors Drury, Winkler and Morgan cash in on 35% share price rally

Xero [NZX: XRO] founder Rod Drury and directors Craig Winkler and Sam Morgan sold shares on market in a multi-million dollar payday, taking advantage of a 35% rally in the stock this year.

Messrs Drury and Winkler each sold one million shares at $20.01, reaping some $20 million apiece, while Mr Morgan sold 500,000 shares at the same price for about $10 million, according to notices lodged with the NZX. Messrs Drury and Winkler are still Xero's two biggest shareholders at 15.2% and 12.8% respectively, while Mr Morgan's stake, held via Jasmine Investment Holdings, reduced to 3.4% from 3.8%.

The price was a 4.2% discount to yesterday's closing price and the shares fell 0.9% to $20.70 today. The notices show Drury and Winkler both appointed First NZ Capital to manage and underwrite the sales for settlement on December 1.

Mr Drury's payday dwarfs his three previous share sales between 2010 and 2012, which collectively netted him about $9.47 million at prices ranging between $6 and $1.45. Mr Winkler bought into Xero in 2009 at 90c a share, joining Mr Drury in a sell-down in 2012 at $6 a share, but has largely maintained his holding. Mr Morgan bought into the Xero initial public offering in 2007 at $1, and has been more active with his shares.

The share sale comes a fortnight after Xero pledged to constrain its annual cash burn for the current year, while reporting a first-half loss of $44.3 million on a 71% gain in sales to $92.9 million. Xero has been chasing long-term value by creating a globally competitive software-as-a-service company at the expense of early profitability and has won the backing of major US investors such as Paypal co-founder Peter Thiel, leaving it flush with funds for the forseeable future.

Since the first-half report, former Xero chief operating officer Ross Jenkins sold 50,000 shares at an average price of $19.80 on-market, while keeping 204,000 shares, and chief platform officer Duncan Ritchie sold 27,000 shares at an average price of $19.86, leaving him with about 5900 shares. Messrs Jenkins and Ritchie also retained beneficial ownership of shares through Xero's employee restricted share plan.

(BusinessDesk)