MYOB founder cuts Xero stake
After a better than six-fold return on his investment to date, MYOB founder Craig Winkler has taken cash off the table from his stake in new-generation accounting software company Xero, cutting his holding to 15.7 per cent.
Mr Winkler on Friday raised $NZ15 million ($A12 million) from the sale, which has reduced his stake from 19.5 per cent, while Xero's co-founders Rod Drury and Hamish Edwards took $NZ5 million and $2 million out respectively.
The transaction formed part of a placement and share sale to two US investor groups, including one backed by PayPal founder Peter Thiel, which have taken a combined 16.8 per cent.
The three Xero investors sold a combined $NZ22 million of their holding, with Xero also placing 10 million shares at $NZ6 each to raise $NZ60 million.
Sharemarket investors greeted news of the placement and sell-down bullishly, pushing the shares to a new high of $NZ6.89 on Friday, with the shares trading later up NZ40¢ at $NZ6.84.
The sale follows the recent listing of Xero shares on the Australian stockmarket, which helped to trigger renewed investor interest in its shares, ahead of yesterday's transaction.
The placement and sale will lift US investor Matrix Capital Management's stake in Xero to 9.8 per cent from 1.8 per cent and Valar Ventures to 7 per cent from 3.9 per cent. Valar is linked with Mr Thiel.
Xero chief executive Rod Drury's holding will fall to 18.5 per cent from 21 per cent with the sale, and co-founder Hamish Edwards' shareholding will reduce to 4.9 per cent from 5.7 per cent.
"As founders, you don't have many opportunities to take money off the table," Mr Drury said of the sale. "The US investors wanted to buy more.
"It is interesting to see this level of support from overseas investors at the same time as MYOB's note issue is under way."
Xero is aggressively rolling out its cloud-based software in Australia, the UK and US, pitching it against incumbents such as Reckon and software rival MYOB, which is raising $125 million from Australian investors via a note issue.
Xero said in mid-November that it would accelerate its investment in the business to take advantage of market conditions. Annualised monthly revenue reached $NZ38.7 million as at September 30, up from $NZ18 million a year earlier, with revenue for the year to March expected to double.
Xero reported NZ$30.6 million of cash on hand at the end of September, and it continues to lose money as it seeks to boost its share of the software market.
The additional funds will give the company additional firepower to pursue acquisitions.