Xero listing in New York slated for next 12-18 months as it eyes US bolt-ons, CFO says
Xero [NZE:XRO; ASX:XRO], the online accounting system provider, considers the next 12 to 18 months as “the most likely timeframe” for a listing on the NASDAQ or the NYSE, CFO Ross Jenkins said.
Xero is also independently looking at acquisitions of small targets in the US that can help the company accelerate its research and development efforts to acquire features and functionality for its online products. Targets would be larger than the acquisitions made in the past two-and-a-half years, which were valued at less than USD 10m each, he said.
Xero’s main focus, however, is on organic global expansion with the priority its ongoing penetration of the US market, Jenkins said.
A listing on one of the New York exchanges would be mostly aimed at enhancing the company’s credibility on the local market as well as addressing a liquid market with an investor base that understands and recognizes the value of a technology-driven company, he said.
Xero has already brought high quality US shareholders onto its register through its October 2010 capital raise, includingFidelity, BlackRock [NYSE:BLK] and a number of East Coast funds, Jenkins said.
The company raised NZD 180m (USD 152m) from a share issue, according to a 14 October company announcement. US investors accounted for NZD 147m (USD 125m) of the overall raise.
In a March 2013 statement, Xero rejected speculation of an imminent US listing as premature.
The chatter picked up last February, however, after Xero appointed Chris Liddell, formerly ofGeneral Motors and Microsoft, as chairman, Bill Veghte as a US-based director, and Peter Karpas as CEO, North America.
Xero is focusing on becoming a global leader in the cloud accounting services for the small businesses space. While it is now concentrating on North America, the company plans to grow in the UK and Australian markets in 2015, through large investment in marketing and sales, Jenkins said.
As it stands, the UK, US, and Australian accounting software markets are dominated by three players.
Australian privately held MYOB is market leader in Australasia, with AUD 247m (USD 225m) in revenues.Sage [LON:SGE] is number one in Europe, with a GBP 4.64bn (USD 7.7bn) market cap, and the top dog in the US is US-basedIntuit [NASDAQ:INTU], with a USD 22.8bn market cap.
Xero has a NZD 5.2bn (USD 4.4bn) market cap. Its shares have risen 422% since the same period last year.
by Davide Schiappapietra in Sydney
mergermarket.com