RAK Rakon

[rmbbrave]

Rakon's $66m share issue over-subscribed
13 May 2006

Rakon, a manufacturer of Global Positioning Systems (GPS) for mobile phones and missiles, said yesterday its $66 million share offering was many times oversubscribed.


There were 41.25 million shares issued at $1.60 each in the initial public offering (IPO) which closed yesterday.

Applicants will be sent allocation notices on Monday and the shares will start trading on Tuesday.

Given the strong demand, brokers expect strong demand.

Rakon's managing director Brent Robinson said Rakon was extremely pleased with the level of interest with over 1800 investors applying for shares including staff.

On listing, Rakon will have about 39 per cent of its shares held by new institutional, retail investors and Rakon employees, with the remaining 61 per cent owned by shareholders that were on Rakon's register prior to listing.

The company is forecasting sales to increase 24 per cent to $90.6m next year, according to the prospectus. That would boost net profit to $7.2m from $4.4m although that forecast was based on an exchange rate of US67c compared with yesterday's level of US63c.

AdvertisementAdvertisementJonathan Oram for IPO lead manager UBS New Zealand said the fall in the dollar would make a material differnce. A one cent fall in the US dollar boosted profit by about $1m although imports of Japanese components meant that was offset by about a third from a similar sized fall of the kiwi against the yen.

The company has developed the world's smallest GPS receiver – the size of a baby's fingernail – which can decode GPS signals in devices such as cellphones.

Rakon enjoys a 60 per cent global marketshare in crystals for GPS.

Rakon sees huge potential for its crystals to be used in the 500-600 million mobile phones and 70-80 million cars made each year. It did elaborate on the potential use in weapons.

Its technology has also been used in the US military to help navigate smart bombs and missiles.

Rakon, winner of last year's New Zealand Trade and Enterprise export awards, manufactures quartz crystals with a dominant share in the world market. US industrial defence giant Rockwell International uses them at the heart of its smart bombs and missiles.

Around 37 per cent of Rakon's sales are in North America.

The proceeds from the IPO will be used to expand production capacity and develop new products. The Mt Wellington-based Rakon already employs 500 staff and it plans to increase staff by around 30 as marketing and production are ramped up.

Ahuareka Trust representing founder Warren Robinson and Robinson Family interests have sold down 35 million shares.

The company was founded by Mr Robinson in an Auckland basement in 1967. It started developing crystals for electrical goods and expanded into electronics such as oscillators and GPS receivers.

After listing, the family trust will retain a 22.6 per cent stake. Mr Robinson's sons Brent (managing director) and Darren (marketing director) will have stakes of 9.3 per cent each.

Peter Maire, founder of the GPS receiver company Navman, will retain a 15.6 per cent stake.

At $1.60 per share, the company will have a market capitalisation of around $170m.

Rakon said it has no plans to pay dividends.

Mr Oran said the high level of interest in Rakon was a strong endorsement of the company.

"Rakon's IPO demonstrates that the New Zealand capital markets are capable of valuing high growth companies," he said.

[sniper]

"Given the strong demand, brokers expect strong demand."

Wow! And shhhhhhhhhhhhhhhhhhhhh ...genuises at work.

[rmbbrave]

Sniper,

No broker said that.

It is poor writing from the author of the article.

Rakon's market cap will be big enough to jump straight in the NZX50.

[world_flyer]

quote:Originally posted by rmbbrave
Rakon's market cap will be big enough to jump straight in the NZX50.

Which means some good demand from the index funds too...

[pimpit]

I applied for a job there.

[Anna Naum]

Little money tied to the index, lots benchmarked but little indexed.

[Futurz]

Rakon market pre-open @ 10am.
Market opens @ 11am.

My pick for the open price is $1.92 []

[rmbbrave]

Rakon ready to race out of starting stall

16.05.06
By Owen Hembry


Shares in Rakon look set to shrug off market weakness and surge when they debut on the sharemarket today.

Stephen Wright, head of advisory at ASB Securities, expected a favourable reception for the GPS technology company, which could push shares issued at $1.60 as high as $2 each.

"Having said all that, markets may be a bit weaker," he said.

The NZX was down on Friday and fell further yesterday, while markets around the world also weakened.

"There should still be, I would hope, some reasonable demand for Rakon because obviously it's a good story," said Wright.

The company designs and manufactures the high performance crystals and oscillators used in global positioning systems products.

Wright expected a mixture of retail and institutional buyers would look at increasing their holdings in Rakon because "everybody's got less than they wanted; that's for sure".

The Business Herald understands some shareholders were offering to sell shares at prices ranging from $1.80 to $2 on the eve of trading yesterday.

Macquarie Equities investment director Arthur Lim also thought a premium of between $1.80 and $2 was possible.

"All the indicators point towards it having a successful listing," Lim said.

"It had good reception in the pre-listing market [and] demand has been strong from not just New Zealand but reportedly from overseas."

The company would have a market capitalisation of $170 million based on the issue price of $1.60 a share.

The initial public offer of 41,250,000 shares valued at $66 million closed on Friday with allocations being made to retail brokers and institutions, while demand outstripped supply. There was no general or public pool for shares.

The money raised from the listing would fund growth through new product development, investment in manufacturing equipment and factory expansion.

On listing, about 39 per cent of Rakon's shares will be held by new investors, with the rest held by pre-listing shareholders including Navman founder Peter Maire.

Maire and his investment partners bought 20 per cent of the Auckland-based company in November.

[TheBossMan]

Looks like this one is going to rocket? Market depth suggests plenty of interest and won't be surprised with $2.25 or more.

disc: hold none and won't buy today.

[rmbbrave]

First trade @ $2.20