Venture Advisory July 2017 report: Markets and company updates

Full Report

Venture Advisory July 2017 report: Markets and company updates

Already a Subscriber? Login here to view Full Report

Venture Advisory July 2017 report: Markets and company updates
Venture Advisory monthly report: Markets and company updates

Industry news

In July 2017, the Australian information technology sector [AXIJ] was down 0.5% while the telco sector [AXTJ] experienced a decline of 4.3%. Both the All Ordinaries [AORD] and ASX 200 [AXJO] were flat

Vocus Group received preliminary, indicative non-binding proposals from Kohlberg Kravis Roberts and Affinity Equity Partners

Hansen Technologies acquired Enoro Holding for A$96m

Optus announced a A$1bn investment in regional Australia to build 500 new mobile sites and network upgrades

Monthly wrap up

Share price performance and valuations

July’s best and worst performers:

  • Technology – Online retailer Kogan.com was up 53% following the release of positive trading results and information that it is enhancing its product offering via a move into insurance
  • Media – Seven West Media traded up 13% for the month, while Fairfax lost 10% to its share price as it failed to attract an offer from two perspective private equity buyers
  • Telco and ICT – Bulletproof Group was up 22% in July after seeing its share price fall over 60% throughout the year

M&A and investment activity

The domestic market saw several transactions announced:

  • Hansen Technologies acquired Enoro Holding for A$96m, a market leading provider of Customer Information Systems and Meter Data Management systems for the Nordic energy market
  • Sun Hung Kai & Co acquired a 5.3% stake in Ardent Leisure Group
  • NextDC launched an unconditional offer to acquire the remaining ~81.4% stake that it does not already own in Asia Pacific Data Centre Group for A$175m in cash

Internationally, there was a variety of activities including:

  • Warburg Pincus invested US$100m in CleanMax Solar to fund growth opportunities outside India and to improve product offerings
  • A consortium led by Alibaba invested US$700m in Ofo, the world’s largest bike sharing company to internationalize the business

Technology Sector – Highlights

JULY SHARE PRICE PERFORMANCE (BEST AND WORST) — TECH

Superannuation fund Hostplus announced that it will invest A$50m into a new tech-focused venture capital fund established by Carthona Capital to support technology and innovation in the country.

SproutX, Australia’s national agtech innovation hub partnered with Stone & Chalk to create a hub focused on ‘Agri Fintech’.

INDUSTRY UPDATE – TECHNOLOGY

Date Company Comments (all growth figures are based on pcp)
3 Jul 17 Hansen Technologies Announced acquisition of Enoro Holdings, a market leading provider of Customer Information Systems and Meter Data Management systems for the Nordic energy market for A$96m (EV/EBITDA multiple of 10.6x)
4 Jul 17 Technology One The company reported 1H17 revenue of A$113.9m (up 12.8% YoY) and net profit of A$8.1m (up 9.5% YoY). It expects FY17 profit growth to be in the range of 10-15% with substantial base of committed annual licence fees
5 Jul 17 Wisetech Global Announced acquisition of Bysoft, the largest provider of customs and logistics compliance solutions to the logistics industry across Brazil for A$11.8m (EV/Revenue of 3.8x).
11 Jul 17 Trade Me Group Signed a sale and purchase agreement to acquire Limelight Software, a cloud-based dealer management platform for motor vehicle dealers for an undisclosed amount
12 Jul 17 Bravura Solutions Scottish Friendly Assurance Society Limited, successfully deployed Bravura’s Sonata administration platform for its life and pensions business, which included migration of 47.6m client transactions
24 Jul 17 Data#3 The company estimates its FY17 NPBT of A$22.4m (up 15% YoY) and NPAT of A$15.2m (up 10% YoY) driven by growth in services and cloud-based businesses. The full-year audited results will be announced on 23 August 2017
24 Jul 17 Data#3 The company exercised its option to acquire an additional stake of 15.8% in Discovery Technology, increasing the total holding to 77.4% for an additional investment of A$0.7m
25 Jul 17 Kogan.con Kogan.com signed a three-year agreement with Hollard Insurance Company to market its insurance products under Kogan Insurance
27 Jul 17 SMS Management & Technology The company reported unaudited FY17 revenue of A$304.5m and EBITDA of A$10.9m. It will release its audited financial results on 23 August 2017

PEOPLE

Date Company Comments (all growth figures are based on pcp)
24 Jul 17 Aconex Announced appointment of Gabriele Famous as Chief Marketing Officer. She will be responsible for global marketing strategy and operations, including product and online marketing, demand generation, and communications
31 Jul 17 OFX Announced appointment of Selena Verth as Chief Financial Officer effective from 1 November 2017, following the resignation of Mark Ledsham

SOURCE: Factset, AFR, ASX Company Announcements, Company websites

Note: Data collected 31 July 2017. See Appendix One for ticker and company details

Media Sector Highlights

JULY SHARE PRICE PERFORMANCE (BEST AND WORST) — MEDIA

 
The latest News Media Index figures reported total news media revenue in FY17 had dropped 10.5% throughout the year to A$2.1bn. Growth in digital news media revenue rose 7.5% to A$463m which was offset by a decline in print news media of 14.5% to A$1.6bn.

INDUSTRY UPDATE – MEDIA

Date Company Comments (all growth figures are based on pcp)
3 Jul 17 Fairfax Announced that the company did not receive a binding offer from either he TPG Consortium or Hellman & Friedman. Fairfax affirmed it plans to continue with the separation of its Domain business
3 Jul 17 Ten Network Holdings  Announced appointment of PPB Advisory as receivers and managers of Ten Network Holdings Limited. The receivers and managers further appointed Moelis & Co to act as the independent advisor for the sale or recapitalisation of the business and assets of Network Ten. The company also secured a A$30m funding package so that it can keep operating while receivers and managers look to sell or recapitalize the business
13 Jul 17 iCar Asia  The company reported net cash position of A$18.9m, with cash collections of A$2.5m (up 35% YoY). Strong performance in 2Q17 quarter was driven by strong increases in paid accounts (up 28% YoY), overall listings growth (up 22% YoY) and total leads across the company (up 8% YoY)
17 Jul 17 APN Outdoor Group  Signed an agreement with XTD Ltd., a digital transit technology company, wherein APN Outdoor will act as a content sales agency for XTD's digital screen networks in the Melbourne and Brisbane metro rail networks
17 Jul 17 Village Roadshow  Invested A$1m in Linius Technologies; proceeds of the funds will be used to accelerate its commercial activities around its patented product, the Linius Video Virtualization Engine
31 Jul 17 Macquarie Media  Signed a binding share purchase agreement with Stingray Digital International Limited to sell its subsidiary Satellite Music Australia for A$5.9m

PEOPLE

Date Company Comments (all growth figures are based on pcp)
25 Jul 17 Nine Entertainment Announced appointment of Karen Madden as Group Marketing Director

SOURCE: Factset, AFR, ASX Company Announcements, Company websites

Note: Data collected 31 August 2017. See Appendix One for ticker and company details

Telco and ICT Sectors – Highlights

JULY SHARE PRICE PERFORMANCE (BEST AND WORST) — TELCO

Optus announced a A$1bn investment in regional Australia to build 500 new mobile sites and upgrade ~1,sites to 4G.

INDUSTRY UPDATE – Telco and ICT Sectors

Date Company Comments (all growth figures are based on pcp)
4 Jul 17 Spark New Zealand Completed the acquisition of Ubiquity, a marketing automation provider to help in growth strategy of Spark’s big data and analytics software business Qrious
7 Jul 17 Vocus Group The company received a preliminary, indicative and non-binding proposal from Kohlberg Kravis Roberts & Co. L.P. to acquire 100% of the shares at A$3.50 per share. It also received a proposal from Affinity Equity Partners and its affiliates to acquire all the shares of the company at A$3.5 per share on 11 July 2017
7 Jul 17 Bulletproof Group The company revised its estimates with FY17 revenue to be around A$49m from A$48.5m. Underlying EBITDA was revised to A$2.4m from A$3m and EBIT loss of A$2.0m from a loss of A$1.5m, due to slower-than-expected turnaround improvements and forecasting corrections
14 Jul 17 Vocus Group Concluded its negotiated buyback, repurchasing 1.2m shares for A$6.6m
24 Jul17 Speedcast International Acquired UltiSat, for US$65m plus an earn-out consideration of up to US$35m. UltiSat is a satellite services provider to the Military, Government, IGO and NGO sectors, the acquisition will help Speedcast serve the Government vertical. UltiSat's CEO Mohammed G. Abutaleb will lead the newly-formed Government division at Speedcast. The transaction has EV/FY17EBITDA of 7x (pre-synergies), reducing to approximately 5.5x post-synergies
27 Jul 17 Inabox Group The company expects FY17 unaudited revenue of A$90m (up 2.3% YoY) and EBITDA of A$6m (up 9.1% YoY)

PEOPLE

Date Company Comments (all growth figures are based on pcp)
7 Jul 17 Vocus Group Announced appointment of David Wiadrowski as the Non-Executive Director of the company. David has over 20 years of board level exposure across the public, commercial and not for profit sectors with experience in the Technology, Telecommunication, Entertainment, Media and FMCG industries
20 Jul 17 Melbourne IT Announced appointment of Andrew Macpherson and Simon Martin to the board, while Tom Kiing will step down from the board at the end of September 2017

SOURCE: Factset, AFR, ASX Company Announcements, Company websites

Note: Data collected 31 July 2017. See Appendix One for ticker and company details

M&A, Investment and IPO activity

Size Acquirer / Investor Target Type Sector Comment
A$96m Hansen Technologies Enoro AS Acquisition Packaged Software Hansen Technologies acquired Enoro Holding, a market leading provider of Customer Information Systems and Meter Data Management systems for the Nordic energy market for A$96m (EV/EBITDA multiple of 10.6x). The acquisition will help Hansen expand its energy billing presence in several European countries including Norway, Sweden, Finland, Germany and Austria and will also strengthen the CIS business. (3 July 2017)
A$44.7m Sun Hung Kai & Co. Ltd. Ardent Leisure Group Minority Stake Movies / Entertainment Sun Hung Kai & Co acquired a 5.3% stake in Ardent Leisure Group. The 24.5m shares were acquired at A$1.8 per share (4 July 2017)
A$6.1m Swift Networks Group Movie Source Acquisition Movies / Entertainment Swift Networks Group acquired Movie Source and its subsidiary VOD for A$6.1m, the consideration comprises cash of A$5.1m and 3.6m shares of Swift Networks Group. The deal reduces Swift Network's content costs and accelerates the strategic plan for vertical and geographical expansion. It also leverages VOD's strength in the hospitality sector and VOD will bring over long-standing contracts with Accor Hotels and InterContinental Hotels, as well as strategic partnerships with systems integrators, Telstra, Blue Sky, Iglu and Triple Play (6 July 2017)
US$700m Consortium ofo Investment Transportation A consortium led by Alibaba invested US$700m in Ofo,world’s largest bike sharing company to internationalize the business (11 July 2017)
A$3.5m MainstreamBPOLtd. IRESS Ltd. /Superannuation Administration Business/ Acquisition Information Technology Services IRESS Ltd. sold its superannuation administration business to MainstreamBPO for A$3.5m. The acquisition complements MainstreamBPO's services, adds scale and new client opportunities. MainstreamBPO anticipates that the transaction will positively impact its FY18 revenue and earnings, with forecast EBIT of A$0.33m (13 July 2017)
US$100m Warburg Pincus CleanMax Solar Investment Hardware & Infrastructure Warburg Pincus invested US$100m in CleanMax Solar to fund growth opportunities outside India and to improve product offerings (13 July 2017)
A$1.9m (US$1.5m) Axxis Technology Group WindTurbine Acquisition Electric Utilities Axxis technologies entered into term sheet to acquire Windturbine for A$1.9m. In addition, Axxis will issue further stock to the shareholders of Windturbine upon the achievement of revenue and EBITDA related milestones within a certain time frame. Additionally, in order to assist with working capital, Axxis has agreed to lend Windturbine A$0.25m. It will also raise A$4m to assist WindTurbine commercialize its products (19 July 2017)
US$2.5b Hangzhou Kuaizhi Technology Co, SoftBank Grab   Investment Internet Software and Services GrabTaxi Holdings announced US$2.5bn of funding. Investors SoftBank Group Corp. and Hangzhou Kuaizhi Technology Co., Ltd. led the US$2bn of the funding and the company will raise additional US$500m from new and existing investors. (23 July 2017)
A$29m NextDC Ltd. Asia Pacific Data Centre Group Acquisition Real Estate Investment Trusts NEXTDC acquired a 14.1% stake in Asia Pacific Data Centre Group for A$29m, with EV/LTM revenue of 16.7x and EV/LTM EBIT of 18.2x. Additionally, 360 Capital Group Limited offered to acquire remaining 80.2% stake by offering A$1.80 per share, while NEXTDC has made a similar offer of A$1.87 per share to acquired 81.4% stake (26 July 2017)

SOURCE: Factset, Internet DealBook, AFR, ASX Company Announcements, PitchBook

Appendix One

TECHNOLOGY MEDIA TELECO & ICT
3P Learning Ltd 3PL APN Outdoor Group Ltd APO amaysim Australia Ltd AYS
Aconex Ltd ACX Asia Pacific Digital Ltd DIG Bulletproof Group Ltd BPF
Afterpay Touch Group APT Carsales.com Ltd CAR Chorus Ltd CNU
Altium Ltd ALU Event Hospitality & Entertainment Ltd EVT Inabox Group Ltd IAB
ASG Group Ltd ASZ Fairfax Media Ltd FXJ Macquarie Telecom Group Ltd MAQ
Bravura Solutions BVS GTN Group GTN Megaport Ltd MP1
Computershare Ltd CPU HT&E HT1 Melbourne IT Ltd MLB
Crowd Mobile Ltd CM8 iCar Asia Ltd ICQ MNF Group Ltd MNF
Data#3 Ltd DTL Macquarie Media Ltd MRN NEXTDC Ltd NXT
ELMO Software ELO Nine Entertainment Co Holdings Ltd NEC Singapore Telecommunications Ltd Z74
GBST Holdings Ltd GBT News Corporation NWS Speedcast International Ltd SDA
Grays eCommerce Group Ltd GEG oOh!media Ltd OML Spark New Zealand Ltd SPK
Hansen Technologies Ltd HSN Pacific Star Network Ltd PNW Superloop Ltd SLC
Infomedia Ltd IFM Prime Media Group Ltd PRT Telstra Corporation Ltd TLS
Integrated Research Ltd IRI REA Group Ltd REA TPG Telecom Ltd TPM
IRESS Ltd IRE SEEK Ltd SEK Over the Wire Holdings Ltd  OTW
iSelect Ltd ISU  Southern Cross Media Group Ltd SXL Vocus Group Ltd VOC
iSentia Group Ltd ISD  Sky Network Television Ltd  SKT
Kogan.com Ltd KGN Seven West Media Ltd  SWM
OFX Ltd OFX Ten Network Holdings Ltd  TEN
Mobile Embrace Ltd MBE  WPP AUNZ WPP
MYOB Group Ltd MYO  Village Roadshow Ltd VRL
Reckon Ltd  RKN
Retech Technology RTE
SMS Management & Technology Ltd  SMX
Technology One Ltd  TNE
Trade Me Group Ltd  TME
Webjet Ltd  WEB
Wisetech Global Ltd WTC
Xero Ltd  XRO
zipMoney  ZML