SaaS Provider MSL to List in $62 Million Deal
Founded in 2007, MSL has grown organically and through acquisitions and is now servicing approximately 2,000 clients in over 20 countries.
Software as a service (SaaS) provider MSL Solutions Limited is seeking to raise $15 million to list on the ASX in a deal that values the company at over $62 million. Focused on businesses in the sport, leisure and hospitality sector, the company’s primary asset is intellectual property (‘IP’) surrounding its MPower Platform, a cloud-based software application designed to improve business workflows, governance and guest experiences for clubs.
Founded in 2007, MSL has grown organically and through acquisitions and is now servicing approximately 2,000 clients in over 20 countries. Its MPower platform is being used by member organisations including golf and other registered clubs, stadia and arenas and hospitability and entertainment venues. While the recent acquisitions of GolfBox and Vertada – two software providers with a focus on Europe – have expanded MSL’s product range and geographic reach, costs have significantly increased as well and the company will swing to a statutory loss for the financial year 2017.
In its prospectus, management forecasts $6.5 million in earnings for FY18, which would represent a compound annual growth rate of over 30% on the back of 10% revenue growth. Income visibility is high and management expects that the share of recurring revenue will further rise to over 50%. If revenue growth can be sustained an improvement in earnings margins is a major catalyst while successful integration of strategic acquisitions provides additional upside.
Hurdles include integration risks, margin pressure and competition, however MSL targets to service an addressable market of over 12,000 member organisations in Australia and there are significant growth opportunities in the sector, both domestically and internationally. Management predicts to pay dividends as early as 2018, which remains subject to achieving the economic targets outlined in the prospectus. Some of the predictions seem highly ambitious but could simply be a reflection of management’s confidence in the company.
ASX Code: MPW
Shares on Offer: 60m
Listing Price: $0.25
Market Capitalisation: $62.3m
Listing Date: May 5
Author: Simon Herrmann
Apr 28, 2017
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.