Social Media Start-up Visual Amplifiers Withdraws IPO
As at 3 May 2016, the ASX website confirmed that the proposed listing would not go ahead as Visual has withdrawn its application. Wise-owl attempted to speak to management but no information was given
Visual Amplifiers Limited, a social media start-up company which initially sought to list on the ASX on 11 May 2016 has withdrawn its IPO application. Criticism recently emerged that the valuation was too high and unsustainable.
Visual Amplifiers eyed an initial public offering (IPO) targeting an indicative market capitalisation of $50million. As per the latest prospectus the company intended to raise up to $20 million to fast-track development of its software platform and increase its sales force. Wise-owl flagged already in the Australian that following smaller raisings of some of its competitors, it appeared that Visual’s valuation may be too ambitious and the raising could be scaled back, cancelled or postponed.
Visual Amplifiers Limited is an Australian software company focused on social media marketing solutions. Visual’s primary asset is a software platform, the VAMP Platform, which streamlines and automates logistical and administrative needs for social media marketing campaign of their customers. Customers are typically corporations or brands who seek exposure to a large social media follower database. The Sydney-based company was founded in 2014 by Digital4ge.
Visual has experienced early demand for its product and started to generate revenue during 1H16. Expansion of its customer base and a subsequent rise in revenue is the primary driver for the share price, while long-term contracts and exclusivity agreements could provide income visibility.
However, Visual does not generate sufficient revenue to fund its daily activities and remains reliant on external capital for the foreseeable future. Further hurdles include competition as the industry is highly competitive and barriers to entry are limited to know-how. Moreover, Visual is reliant on the terms of social media platforms as any regulatory changes may adversely impact the company's ability to generate revenue.
Management has a strong track record in the industry and are major shareholders in the company, however as the company only recently started to generate revenue the IPO appears somewhat premature. There is uncertainty regarding the valuation; as Visual is a start-up company and does not presently generate earnings, IPO investors need to have a speculative appetite for this $50million listing.
As at 3 May 2016, the ASX website confirmed that the proposed listing would not go ahead as Visual has withdrawn its application. Wise-owl attempted to speak to management but no information was given.
Author: Simon Herrmann
May 04, 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.