Straker Translations will use almost two-thirds of the A$21.2 million raised in an initial public offering for sales, development and acquisitions as it chases further growth.
The online translations company will sell 12.2 million new shares at A$1.51 apiece and existing investors Bailador Technology Investments and Milford Asset Management will sell a further 1.9 million existing shares into the offer. Auckland-based Straker is bypassing its local bourse to list on the ASX. The IPO opens this week and the formal listing is expected around Oct. 22.
The prospectus was lodged last week and shows A$13.5 million of the funds raised will go towards sales and marketing, product development, customer acquisitions and M&A activity. ASX-listed Bailador and Milford will pocket A$2.8 million, A$3.1 million will cover the cost of the offer and A$1.8 million will go to working capital.
“The company has undertaken four acquisitions over the last two years and believes that there exists a significant potential market for future acquisitions to be made by Straker following the offer,” chairman Phil Norman said in the offer document. “In addition, the offer is intended to provide the company with access to capital markets, provide a liquid market for shares and assist the company to attract and retain quality employees.”
The sale price values Straker at A$79.4 million, a premium to cornerstone investor Bailador’s valuation as at June 30.
Founders Grant and Merryn Straker aren’t selling any of their holding in the IPO and will have their stake diluted to 14 percent from 18 percent. Bailador is selling about 823,000 shares and will end up with a 14 percent holding, down from 20 percent. Existing shareholders are subject to a series of escrow periods before they can sell down their holdings.
The company has raised NZ$22.5 million during the past three financial years. Since the March 2018 balance date, it bought Spanish firm MSS for NZ$4.5 million and Germany’s Eule for NZ$2.2 million
Straker expects annual revenue will climb 38 percent to NZ$23.5 million in the March 2019 year. Stripping out one-off costs and acquisition expenses, the company expects to report an adjusted loss before interest, tax, depreciation and amortisation of NZ$199,000 in March 2019, compared to an ebitda-loss of NZ$1.4 million in 2018. Including those costs, the net loss is predicted to widen to NZ$2.5 million from NZ$1.5 million.
The company’s cloud-based translation platform uses machine translation, refined by humans to accelerate the process. As at March 31 it had 8,400 customers worldwide, with some 88 percent of revenue derived outside Australia and New Zealand. Its biggest customer accounts for almost 11 percent of revenue and its top 20 make up more than 54 percent.