Powerhouse Ventures - IPO - take 2?

[Snow Leopard]

So they are going to have another go but on the ASX.

See Powerhouse seeks up to A$20 mln in ASX listing (http://www.scoop.co.nz/stories/BU1608/S00109/powerhouse-seeks-up-to-a20-mln-in-asx-listing.htm).

Company website: http://www.powerhouse-ventures.co.nz/

For take one see this thread (http://www.sharetrader.co.nz/showthread.php?10051).

Best Wishes
Paper Tiger

Disc: DYOR

[mondograss]

I bought a small(ish) holding in Powerhouse when they did a Capital Raise via Snowball Effect. I have to say that since then they've been very good at putting other investment opportunities under my nose that I wouldn't normally have had access to. I certainly wont be selling my holding when they list, I consider them a good long term hold if only for the ability to get early access to something new. Plus I like tech companies (my main area of expertise) so that helps.

[kiwidollabill]

They've got ~6 new companies to come on to the books in the near future also. Biggest concern I have is the lack of visibility on the P&Ls of the companies they own

[silu]

FWIW Sam Morgan broke his Twitter silence
1. Have not been Tweeting because Twitter is for trolls, but this deserves a comment …
2. Nobody in their right mind should invest in this IPO: http://www.powerhouse-ventures.co.nz “No track record of sale or spin-out of Portfolio Companies”
3. These sort of crap tech IPOs just ruin it for all the companies that are actually making stuff, selling stuff and have a business model.
4. There. Said it. Back to No Tweeting.

[mondograss]

Actually they're presently facilitating the ASX listing of HydroWorks planned for Q1 2017. Convertible Note offer has just gone out to all PowerHouse shareholders, 12% interest and 20% discount on listing. So basically proving the adage that sometimes it's better to remain silent and appear a fool and open ones mouth and remove all doubt.

[Joshuatree]

Wow ,thats as scathing as one can get.; trashed it. Looks like they've done well so far.

"Powerhouse reported a profit of NZ$2.7 million on income of NZ$7.5 million in the nine months ended March 31. That included a NZ$5.8 million increase in the fair value of its investment portfolio"

.Anyone know what the quality/ track record of management is like and any other opinions

[mondograss]

At the end of the day, they're an incubator basically set up by the University of Canterbury and Lincoln to deal with their commercialisation flow, much like UniServices does for Auckland Uni. Given the push towards commercialisation is a comparatively recent one it's a bit harsh to judge them on what's gone before. You buy in to get exposure to the pipeline if you're interested in investing in early stage tech companies (which I am) but I don't really expect Powerhouse itself to make big $ itself for quite some years given its portfolio is likely to be quite capital hungry for a while yet. Unlike Mr Morgan, we don't all have rich daddies who can prop up our businesses until they become profitable.

[kiwidollabill]

Wow ,thats as scathing as one can get.; trashed it. Looks like they've done well so far.

"Powerhouse reported a profit of NZ$2.7 million on income of NZ$7.5 million in the nine months ended March 31. That included a NZ$5.8 million increase in the fair value of its investment portfolio"

.Anyone know what the quality/ track record of management is like and any other opinions

Their cashflow is $2M negative for operating costs so don't let this fool you.

I know a few of the managers...... Up and down in my thoughts of ability for these type of companies

[kiwidollabill]

Total Rev is $1.6M, $1.2M of it was government grants...

[kiwidollabill]

FWIW Sam Morgan broke his Twitter silence
1. Have not been Tweeting because Twitter is for trolls, but this deserves a comment …
2. Nobody in their right mind should invest in this IPO: http://www.powerhouse-ventures.co.nz “No track record of sale or spin-out of Portfolio Companies”
3. These sort of crap tech IPOs just ruin it for all the companies that are actually making stuff, selling stuff and have a business model.
4. There. Said it. Back to No Tweeting.

http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11687265

[Harvey Specter]

I bought a small(ish) holding in Powerhouse when they did a Capital Raise via Snowball Effect. I have to say that since then they've been very good at putting other investment opportunities under my nose that I wouldn't normally have had access to. I certainly wont be selling my holding when they list, I consider them a good long term hold if only for the ability to get early access to something new. Plus I like tech companies (my main area of expertise) so that helps.I hold a small holding in PVL from there earlier, Partnership days, buying in for much the reasons you note above - access to early stage investments and options to co-invest. I actually disagreed with the move to a corporate model and the IPO but as a small holder, I just went with the flow. I think the partnership model, with a target exit within 1 years was better, though post IPO, there will obviously be much more liquidity.

Depending on how they do at IPO, I will probably take the opportunity to exit. I think their management structure is too expensive. This worked fine when it was the NZ government (Callanhan) funding it but I can't see this continuing, especially with the push into Australia. That expensive management cost with therefore come out of operating cash, or more likely capital raised. The salaries are high and given the type of fund that it is, if they must be so high, should be paid in shares with vesting periods.

In some ways I agree with you that it is too early to judge their performance at incubating and developing companies, but if anything, this just means that they are too early to list. Hydroworks and CropLogic are seeking IPO's in the next 6-12 months and I think Invert is too, especially if they land the big client they are in talks with. PowerHouse should have waited till after this but they need to do an IPO as they are quickly running out of funds (probably because the NZ rich like Morgan dont support them).

You also note the ability to co-invest along side them as a reason to hold. Two thoughts on this. Will they continue to do this as a listed company - in theory, if they can raise enough funds, they will keep as much allocation in house as they can. Alternatively, if they need investors to co-invest with them, do you think they will take your name of their mailing list as they need all the possible investors they can muster (as evidenced by recent raises not being fully allocated, even when syndicated onto crowdfunding platforms.

So while I am more positive than the Hate that is being shown in the NBR comments section, the concerns are real. I also think the comparisons to Punakaiki are worthwhile, in the sense that the fees, management size and performance aren't that similar.

If they IPO above NBV, I will be exiting. If they IPO at a huge discount, I will probably hold on. Somewhere in between who knows but I dont typically hold ASX shares so will probably sell.

[JamesST]

I think this paragraph in the prospectus points to the main problem:
"Powerhouse implemented a series of capital raisingprograms which resulted in proceeds from the issuance ofshares of NZ$3,552,210 during FY2015 and NZ$5,211,470during 3Q2016. These capital raisings funded purchases ofinvestments totalling NZ$1,059,778 and NZ$2,813,742 duringFY2015 and 3Q2016 respectively"

So of the $8.8m raised only $3.8m was invested into companies. The operating costs aren't sustainable.

Other big problems in that prospectus:
* There is basically no share lock up.
* Callaghan funding is taking a big drop to $500k in this financial year and then no contract after this year. The loss of this main source of revenue is to be replaced by an increase in fair value of investments. But this doesn't generate any cash so it is actually to be funded by the IPO.
* The profit was because of an increase in portfolio valuation. Same problem as above. No cash is being generated by the business.

[Harvey Specter]

James - I think you pretty much nailed it. I read all 74 comments on the NBR article - the best/fairest one is probably the one at the bottom. PVL needs to do two things:

- Raise as much money as they can so they can probably support their companies (Med tech and Bio tech are a lot more expensive that SaaS to incubate! just look at PEB, BLT, ATM). $10m wont cut is as half will go to capital raise and operating costs. Even $20m wont last long if they properly support.
- Cut their operating costs. It worked ok when they were sucking on the govt tit but won't now they are spending investors money. Employees should be on slim salaries and big share/option plans (that require share price improvement to be valuable).

[kiwidollabill]

FYI PVL have also placed a number of their people in CEO/SLT positions of their portfollio companies - particularly the early stage ones or 'problem children'.

[Biscuit]

Wow ,thats as scathing as one can get.; trashed it. Looks like they've done well so far.

"Powerhouse reported a profit of NZ$2.7 million on income of NZ$7.5 million in the nine months ended March 31. That included a NZ$5.8 million increase in the fair value of its investment portfolio"

.Anyone know what the quality/ track record of management is like and any other opinions


Personally, I'd steer clear of them, but then I don't like new techs without profitable track and a company that is all about nursing a stable of such things is anathema to me. Don't know much about Powerhouse specifically although I know a bit about one of their techs and not too impressive. Are you investing in the ability of the managers to pick winners or produce winners - any evidence they can do either?

[drcjp]

Past closing date. No info at all, not even NBR knows. What gives?

[Snow Leopard]

Past closing date. No info at all, not even NBR knows. What gives?

I know and you could too :).

Best Wishes
Paper Tiger

Hint: read the supplementary prospectus.

[drcjp]

My God, it reads like an NCEA exam............."pick an answer, any answer, one day you'll get it right"

Thanks Mr Tiger :)

[Marilyn Munroe]

Was reading this item;

http://www.scoop.co.nz/stories/BU1609/S00984/hydroworks-to-raise-another-a15m-ahead-of-asx-listing.htm

What caught my eye was their claim of a proprietary fluid dynamic logarithm which can produce an increase of output up to 15% for existing plants.

There should be hydro generators beating a path to their door to licence this logarithm. Is there any evidence of intellectual property income in their disclosures?

Boop boop de do
Marilyn

We obey the laws of fluid dynamics in this house. Homer J Simpson

[mondograss]

The logarithm is used when rebuilding the turbine, so of no use to the generators, only to companies like Hydroworks that do the overhauls. By the looks of it their win rate is pretty good. I went to their investor presentation and they said there that the big players in the market all have their own variation of the same logarithm. Hydroworks has one developed here in NZ and proprietary software to run it.

But this logarithm is essentially the barrier to market entry for the smaller companies that do turbine maintenance. Tier 2 companies (that don't have this logarithm) can only rebuild the turbine as it was (which would improve efficiency back to as new or a little better, but not much). Tier 1 companies (that have this logarithm) can completely redesign the turbine to be more efficient. However, the other Tier 1 companies only want to do the really big overhaul jobs, it's not worth their while setting up shop here in NZ or even in Aus to do our smaller turbines. So Hydroworks thinks it's found a sweet spot in the market to do that smaller work that's not worth the other Tier 1 companies pursuing, but is too complex for the Tier 2 companies to take on.

[kiwidollabill]

So they made it over the bookbuild (just) $10.2m against their higher target. Another $1.25m in convertible notes.

Success/Failure? I suppose time will tell.....

http://www.scoop.co.nz/stories/BU1610/S00345/powerhouse-raises-a102-mln-in-asx-listing.htm

[kiwidollabill]

First Oz investment announced, they've placed one of their own people in as CEO [url]http://www.asx.com.au/asxpdf/20161017/pdf/43c0xhx32j0t7w.pdf[url]

[Jerry]

Well over a year since anyone commented on these guys. What happened to this firm? I know that after the Hydroworks disaster, their shares plummeted. Do they still exist?

[percy]

Well over a year since anyone commented on these guys. What happened to this firm? I know that after the Hydroworks disaster, their shares plummeted. Do they still exist?

Yes.Listed on ASX.
Go to www.stocknessmonster.com and then enter their code PVL.
Reminds me of those great USA televangelists;"I have sinned,I have lost your money,I have repented,send me more money,so I may sin again."

[wizAlvin]

last hours for 2018 competition entries

[Hectorplains]

Well over a year since anyone commented on these guys. What happened to this firm? I know that after the Hydroworks disaster, their shares plummeted. Do they still exist?

https://www.stuff.co.nz/business/100422571/christchurch-citys-value-in-powerhouse-evaporates-further

Not commented on, as best avoided. See also Croplogic (CLI) - now languishing at 8c (and probably only that high due to low liquidity) http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11921437

[Jerry]

Thanks, Percy. I see they are at 24c, which is more than I thought they would be. Perhaps there is hope they might do something now the directors have changed; it seemed such a worthwhile venture.

[percy]

Thanks, Percy. I see they are at 24c, which is more than I thought they would be. Perhaps there is hope they might do something now the directors have changed; it seemed such a worthwhile venture.

They can talk the talk,have have failed to walk the walk.
The only "worthwhile" ventures are profitable ventures.
Profitable ventures mean suppliers and staff get paid,while investors don't lose their capital.
So take care,and don't give them anymore capital,no matter how good the talk the talk is.

[mondograss]

Apparently they're about to screw over another of their companies, Motim Technologies, by forcing them into some weird sell out with a company that doesn't appear to really exist and isn't offering any cash (just some shares in the new entity). Weird, I have no idea why these idiots seem so hostile to their own portfolio entities. Hydroworks could have survived if PVL hadn't charged stupid interest on the money they lent them to get through their contracts.

[Jerry]

Pleased to have avoided Crop Logic; wish I had avoided PVL too.

[mondograss]

And now PVL have removed their own appointed director from the 2 person board of Motim. Just going from strength to strength.

[mondograss]

And now they've removed the second director while telling the ASX it's because Motim didn't call a shareholders meeting, when in fact that meeting had been called back on the 22nd December and will in fact be held tomorrow.

And they've also just removed the founders of another of their companies, SolarBright, as well. Wow they're really determined to go nuclear.

[Grimy]

I must admit I was stupid (gullible?) enough to put a few thousand into this, thinking I was supporting a worthwhile venture. Help some up-and-coming companies. Maybe make some money myself. Hmmmmmm. And hard to get out of unless you want to take about .18cents for the shares which were about 1.07 when floated.