KTM Capital wins coveted IPO role

When it comes to a high-profile initial public offering, it helps when you’re a banker if you have known the founder and chief executive of the company for a few years.

So it is with KTM Capital principal John Young, an ex-McKinsey consultant, who has known Freelancer International Ltd CEO Matt Barrie since 2009.

Barrie has been loyal to Young and KTM Capital even when local giant Macquarie Group Ltd knocked on the door of the Pyrmont headquarters of Freelancer offering Barrie a term sheet, a financial commitment to conduct the company’s IPO in 2014.

Instead, Barrie rejected Macquarie’s offer and that of another bulge bracket investment bank and decided KTM Capital would be in charge of selling 30 million Freelancer shares at 50 cents each. KTM Capital will get an underwriting commission of $450,000 plus costs and expenses associated with the IPO.

“It’s a quick and straightforward IPO,” Barrie told DataRoom, standing on the wooden deck of Freelancer’s harbourside office dressed in a pink dress shirt and jeans. “We’re not putting a huge amount of stock out there.”

The amount of stock that will be sold and the fees may not look impressive but for an obscure Sydney-based boutique investment bank such as KTM Capital, the Freelancer IPO gives it cache in the market.

That may make KTM Capital an attractive underwriting option for similar companies who may have previously only considered a firm such as Macquarie, the number one ranked Australian IPO underwriter this year, according to Bloomberg data, with a 41 per cent market share.

Freelancer's IPO is set to give the company a $218 million market value. Barrie and his fellow directors have given a guarantee they will not sell any of their stock, 87 per cent of the company’s issued capital, for 12 months.

Barrie says he wants a diverse share register for Freelancer comprising fund managers and individual investors.

The response to the IPO has been “overwhelming,” says Barrie, declining further comment on demand for Freelancer shares. He will have a 46 per cent stake in the company after the IPO and forecasts Freelancer’s net profit in the 12 months to December 31 to be $471,000 on revenue of $18.3 million.