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9 Spokes International to Go Public in $80 Million Deal

9 Spokes International to Go Public in $80 Million Deal
To date 9 Spokes has established agreements with Deloitte Services Pty Ltd and Barclays plc as well as contracts with a few high profile clients, which could yield interest towards the stock.
May 31, 2016 By Simon Herrmann Tags: IPO

Most analysts project that spending on cloud services will likely rise at double-digit rates through 2020. According to Gartner the worldwide Software as a Service (‘SaaS’) market grew nearly 20% in the past year.

The next software IPO comes from New Zealand based 9 Spokes International Limited, a company focused on enterprise software, founded in 2011. The company’s primary asset is the “9 Spokes Platform” a cloud-based software application designed for SME’s to aggregate third party software and analyse data. The company aims to raise up to $25million and based on the offer price of $0.20 per share, the group could be valued at up to $80.6million.

To date 9 Spokes has established agreements with Deloitte Services Pty Ltd and Barclays plc as well as contracts with a few high profile clients, which could yield interest towards the stock. The company targets subscription based revenues and there is potential to establish recurring revenue streams via long-term channel partnerships.

However, IPO investors have to note that costs have significantly exceeded revenues to date and 9 Spokes is reliant on external capital to fund its operations. The valuation incorporates a significant degree of growth and business success relative to its current position. Furthermore, the software industry is characterised by high competition and there is no guarantee that the company can grow its market share while a high free float may impair early trade in its shares.

Overall 9 Spokes offers speculative exposure to demand for cloud-based software applications. Existing agreements with international companies is an attractive quality, however, the valuation assumes a significant degree of growth and business success, which is not guaranteed. Additional operational hurdles include funding demand and competition. Even though 9 Spokes aims to tap into an industry which is projected to grow significantly, uncertainties surrounding its free float and valuation remain significant obstacles.

About the IPO

Company: 9 Spokes International

ASX Code: 9SP

Shares on Offer: 125 million

Listing Price: $0.20

Market Capitalisation: $80.6m

Listing Date: June 9

This publication appeared first on The Australian.

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Simon Herrmann Author: Simon Herrmann May 31, 2016

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.


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