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Thread: Xro - xero

  1. #1
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    Default Xro - xero

    [quote]quote:Company Code Released Type Headline
    New Zealand Exchange Limited NZX 11 May, 2007, 12:19 GENERAL Xero announces initial public offering of $15 million
    Full Text of Announcement
    Xero announces initial public offering of $15 million

    Xero Live Limited ("Xero") has today confirmed that it will proceed with an initial public offering on the NZSX to raise $15 million, reserving the right to accept a further $3 million in
    oversubscriptions.

    The offer, at $1.00 per share, will open on Monday 14 May 2007.
    Xero, based in Wellington, provides an online accounting system for small and medium sized enterprises (SMEs), which typically have less than 20 employees. Its product has been available in a limited release since April 2007 and Xero has already attracted more than 100 paying customers. Short-term plans include expansion within New Zealand initially, then into the UK and Australia.

    Xero was established in July 2006 by Rod Drury, an experienced technology entrepreneur with a record of building successful software businesses, and Hamish Edwards, the owner of a SME accounting business and a commentator on SMEs. Mr Drury is Chief Executive Officer and Mr Edwards Chief Financial Officer. Xero has recruited a strong management team and currently has 27 employees.

    Mr Drury said Xero's product had received strong endorsement in testing and marketing to date. "We believe the convenience and flexibility of an online accounting solution, adopting a
    'software-as-a-service' model, is highly attractive to SMEs and their owners. It means they can keep up-to-date accounts that are simple to maintain, always accessible online, can be shared easily with advisers, and do not require up-front costs such as software installation and maintenance."

    Xero is chaired by Phil Norman, an experienced company director, advisor and investor with more than 30 years' involvement in information technology and telecommunications. The other independent directors are Graham Shaw, Guy Haddleton and Sam Morgan.

    Mr Norman said the board was delighted to offer the public an opportunity to participate in a New Zealand based technology venture. "The business has achieved considerable momentum in a short time, based on a strong business concept with demonstrated appeal to a large target market. The number of SMEs in our target countries - New Zealand, the UK and Australia - is around 5.8 million. The proceeds of the IPO will fund Xero's continued
    market development and growth."

    Mr Norman said "We have considered a number of models for raising the additional capital required, but we believe the profile and transparency created by a public offering will be most effective in accelerating our business plan."

    Xero's financial adviser and joint organising sponsor is Cameron Partners Limited. First NZ Capital Limited is lead broker and joint organising sponsor.

    The independent directors intend to subscribe for $1.35 million of Shares under the offer, and strategic partners and other investors for approximately $5 million. None of those persons
    guarantee the Shares. The balance of the offer is reserved for clients of First NZ Capital, and for other investors on application.

    The Offer Document (being a combined Investment Statement and Prospectus) will be available later today at www.xero.com/investors, and is expected to be available in hard copy from First NZ Capital by mid next week. The minimum application is for 1,000 shares, and thereafter in multiples of 500 shares. The offer closes at 5.00pm on 30 May 2007 and Xero
    expects that its shares will be quoted on the main board of NZX from 5 June 2007. Future announcements through NZX will be released under ticker code XRO.

    Application has been made to New Zealand Exchange Limited ("NZX") for permission to list Xero Live Limited ordinary shares on the NZSX Market and all of the requirements of NZX relating thereto that can be complied with on or bef

  2. #2
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    Fishers have invested in Rekon on the ASX and it's growing well.

    There are so many of these business software businesses, I guess there is a market and a killing for the top dogs.

    Sometimes it's not the best product but the best marketing that wins as once a business has the product they don't want to change.

    So money is in the on going support not necesarily the initial seale.

  3. #3
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    As a business owner, I'll be keeping a close eye on this one...both for possible use as a cuistomer and as a possible investor.

    The concept certainly has potential for our market......there are competitors(netsuite, etc).....but I'll be cheering for the home team......I'll likely wait and see how much trqaction they get first, and asking around the small business communtiy on the uptake before takin a plunge.

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    These guys have clearly followed the 42 Below story closely.

    Everything is the same so far - promising product, no revenue or profits, good team with successful past setting themselves a "take over the world" goal. Even the sort of money they want, the percentage of the company that money buys public shareholders - all very similar.

    Like 42 Below, it is totally a bet on management, and, management get the majority of the rewards while you put up most of the money.

    However, unless you're an entrepreneur yourself capable of founding such a business, it is the only way you'll be involved in such a venture, and they are not being dishonest about the risk.

    Like 42 Below, I'll probably watch from a distance, but best of luck to them I say.
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  5. #5
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    The only thing of substance I could see in the offer doc is the that founders suddenly become very rich.

    My main take home points from prospectus are:

    1. Prospective 2008 revenue from customers of $550k does not look compelling. This eqautes to straight line growth over year from zero to 1833 customers each paying $50 per month. This seems a little light for software that is set to take over the world.

    2. Operating expenses forecast to be $5.4m.

    3. Total shares outstanding will be 55m so this company is valued by the offerers at time of IPO of $55m.

    4. $300k of the cash raised will be used to lend to the directors at 4%, so they can buy shares.

    5. No forecasts or projections to support valuation.

    My take on the service as an SME owner [ie I am their target market]

    1. Accounting software is a highly competitive busines dominated by large incumbents, switching costs are high in terms of time. You would need to see a large benefit to switch, its worse than switching banks.

    2. SME's who don't already use accounting software usually have good reasons for this. Being available on the internet is not a good reason.

    3. Simple to use means only useful for simple things.

    4. No fixed asset register

    5. No payroll

    6. No inventory

    7. Each county has its own standards and requirements so its not quite as easy as alluded to in the prospectus, to transfer accounting software from country to country.

    Unanswered questions

    1. Is Hamish getting paid good appearance money.

    2. Did Chris know his comments would be headlined in the prospectus?

    3. Who was the ad agency who wrote the prospectus?


    My overall take on the IPO

    1. I find it difficult to see where their customer base will come from

    2. $600 per year seems expensive for what most of us SME's can do on a simple spreadsheet... and with internet banking

    3. Most of the writing is in the special language of advertising and marketing people that sounds like it is saying something but it isn't really.

    4. I think you will get a better risk adjusted return betting on the Africans to take out the RWC with the TAB at $6.00.

    5. Makes my BIO shares look attractive.

    6. If you have a compelling offer you dont need ad people to write your prospectus or to refer to other successful companies/people to try and get a pseudo halo effect.


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    I haven't seen the prospectus yet - is it available online?
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  7. #7
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    Duh, ignore that. Got it now. Should learn to read!
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  8. #8
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    Its a qucik read if you skim over the advertising speak LOL

  9. #9
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    have a friend who's just launched www.1place.co.nz this is for small to medium business for accounting software maybe he will float after xero.. Free 3 months trial available on their site

  10. #10
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    I use "BOOKs ARE US"
    The main reason is coz it downloads straight into my accountants system for finial tax returns etc.
    But will keep an eye on this one.

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