Jobs site make its $700m debut
For a brief moment on Friday, a small company that did not exist four years ago and will barely turn a profit was worth more than a $1 billion.
The outsourcing website Freelancer.com has again shone a light on local technology stocks, with the company doubling in value on its sharemarket debut.
Shares in the online job market outfit at midday started trading at $2.50 each.
In the initial frenzy Freelancer.com peaked at $2.60, giving the company a market capitalisation of $1.1 billion.
But they ended the day at $1.60, putting the site's value at $697.6 million.
Freelancer.com is a website that allows people to post a job and get freelancers from around the world to bid on it. The company owns 40 similar sites around the world, including Freelancer.co.uk in Britain. Its entry on the ASX comes amid a boom in technology stocks in the US and Australia, with the foreign exchange trading site OzForex opening locally and Twitter listing on the New York Stock Exchange earlier this month.
Part of the frenzy was a result of Freelancer being tightly held, with just 6.9 per cent of its shares sold on the ASX.
Its chief executive and founder, Matt Barrie, retains the lion's share of the company's stock, holding a 46 per cent stake.
The current valuation puts Mr Barrie's paper wealth at $320 million, and he described the market debut as a "land grab".
He said the company's immediate focus would be to build up its management team. "It is all about execution and growth," he said.
Seek co-founder and chief executive Andrew Bassat is among the high-profile investors to throw their weight behind the IPO. Mr Bassat said the company was well positioned to grow its share of the online outsourcing market.
"The market Freelancer operates in is potentially very large and there is plenty of blue sky if the company can continue to execute well," he told BusinessDay.
Freelancer.com is expected to deliver a post-tax profit of $471,000 for the past financial year. This is down from $728,000 in 2012.
Technology lawyer and investor Nick Abrahams said the number of US companies and investors coming to Australia had jumped in the past six to eight months.
He said companies were now being valued more closely to their US counterparts. "There's a bit of a revaluation of Australian technology companies to get them closer to US company valuations," he said.
"We're definitely seeing US companies and investors coming to Australia."
He said the latest activity in the tech sector followed the launch of group-buying websites such as Groupon, which had fallen in popularity in recent times due to saturation in the market.
While he said the success of Freelancer could also be threatened by a crowding in the outsourcing market, he said Freelancer's business model had "longevity".
"The business is likely to be more sustainable than group buying sites," he said.
Freelancer's debut is the 33rd company listing on the ASX this year.
It comes amid a flood of listings to hit the market as investors flock to the stock exchange amid record gains in equities.