AFTER a better than sixfold return on his investment so far, MYOB founder Craig Winkler has taken cash off the table from his stake in accounting software company Xero, cutting his holding to 15.7 per cent.
Mr Winkler on Friday raised $NZ15 million ($A11.8 million) from the sale, which has reduced his stake from 19.5 per cent. At the same time Xero co-founders, Rod Drury and Hamish Edwards, took out $NZ5 million and $NZ2 million respectively. The transaction formed part of a placement and share sale to two US investor groups, including one backed by PayPal founder Peter Thiel, which have taken a combined 16.8 per cent stake.
The three Xero investors sold a combined $NZ22 million of their holding, with Xero also placing 10 million shares at $NZ6 each to raise $NZ60 million.
Investors reacted bullishly to the news, pushing the shares to a record high of $NZ6.89, closing up NZ44? at $NZ6.88.
The sale follows the recent listing of Xero shares on the Australian stock exchange, which has triggered renewed interest in the stock amid optimism for its growth outlook.
The shareholding of Mr Drury, Xero's chief executive, will fall to 18.5 per cent from 21 per cent, while Mr Edward's shareholding will reduce to 4.9 per cent from 5.7 per cent.
"As founders, you don't have many opportunities to take money off the table," Mr Drury said. "The US investors wanted to buy more. It is interesting to see this level of support from overseas investors at the same time as MYOB is seeking to raise funds."
Xero is aggressively rolling out its cloud-based software in Australia, Britain and the US, pitching it up against incumbents such as Reckon and MYOB, which is in the process of raising $125 million from Australian investors via a note issue.
Xero said in mid-November it would accelerate its investment in the business to take advantage of market conditions. Annualised monthly revenue reached $NZ38.7 million as at September 30, up from $NZ18 million a year earlier, with revenue for the year to March expected to double. It reported $NZ30.6 million of cash on hand at the end of September and it continues to lose money as it seeks to boost its share of the software market. The extra funds will give it more fire power for acquisitions.
Frequently Asked Questions about this Article…
What did MYOB founder Craig Winkler sell and how much did he raise from his Xero stake sale?
Craig Winkler reduced his Xero holding from 19.5% to 15.7%, raising NZ$15 million (about A$11.8 million) by selling part of his stake.
Which Xero co‑founders also sold shares and how did the sales change their ownership?
Xero co‑founders Rod Drury and Hamish Edwards also sold shares. Drury raised NZ$5 million, cutting his stake from 21% to 18.5%, while Edwards raised NZ$2 million, reducing his holding from 5.7% to 4.9%.
Who bought the shares and what new investor stake was created in Xero?
The transaction formed part of a placement and share sale to two US investor groups — including one backed by PayPal founder Peter Thiel — which together took a combined 16.8% stake in Xero.
How much did Xero raise through the placement and what were the terms?
Xero placed 10 million shares at NZ$6.00 each, raising NZ$60 million through the placement separate from the NZ$22 million of shares sold by the three founders.
How did Xero’s share price respond to the placement and founder sales?
Investors reacted bullishly: Xero shares hit a record high of NZ$6.89 and closed at NZ$6.88 following the news of the sale and placement.
What recent revenue and cash figures did Xero report and is the company profitable?
As at September 30 Xero’s annualised monthly revenue reached NZ$38.7 million (up from NZ$18 million a year earlier). It reported NZ$30.6 million of cash on hand at the end of September but continues to lose money as it seeks to grow market share.
What is Xero’s growth strategy and who are its main competitors?
Xero is aggressively rolling out its cloud‑based accounting software in Australia, Britain and the US, competing with incumbents such as Reckon and MYOB. The company says the extra funds will give it more firepower for investment and potential acquisitions.
How does this share sale connect with MYOB’s own fundraising efforts?
The Xero transaction occurred as MYOB was seeking to raise about $125 million from Australian investors via a note issue. Xero’s founders noted it was interesting to see strong overseas investor support for Xero at the same time MYOB was raising funds.
Call 1300 880 160
Start a chat
Schedule a call
