Winkler takes cash, trims stake in Xero

AFTER a better than six-fold 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.

By InvestSMART · 1 Dec 2012

By InvestSMART ·
1 Dec 2012

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Mr Winkler on Friday raised $NZ15 million ($12 million) from the sale, which has reduced his stake from 19.5 per cent. Xero co-founders, Rod Drury and Hamish Edwards, took $NZ5 million and $NZ2 million out 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.

"As founders, you don't have many opportunities to take money off the table," said Mr Drury, Xero's chief executive. "The US investors wanted to buy more."

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Frequently Asked Questions about this Article…

Why did Craig Winkler sell some of his Xero shares?

Craig Winkler trimmed his Xero stake to take cash off the table after enjoying a better-than six-fold return. The sale formed part of a placement and share sale to new investors and reduced his holding while realising NZ$15 million (about $12 million).

How much did Craig Winkler raise and how did his Xero ownership change?

Winkler raised NZ$15 million (approximately $12 million) from the sale, cutting his Xero stake from 19.5% down to 15.7%.

Did Xero co-founders also sell shares, and how much did they take out?

Yes. Xero co-founders Rod Drury and Hamish Edwards also sold down small portions of their holdings, taking NZ$5 million and NZ$2 million respectively as part of the same transaction.

Who bought the shares and how much of Xero did they acquire?

Two US investor groups participated in the placement and share sale, including one backed by PayPal founder Peter Thiel. The US groups together took a combined 16.8% stake in Xero.

Did Xero issue new shares as part of the transaction and how much was raised?

Yes. Xero placed 10 million new shares at NZ$6 each, raising NZ$60 million as part of the overall deal.

How did the market react to the placing and founders' share sales?

Investors responded positively and drove Xero shares to a record high of NZ$6.89. The stock closed at NZ$6.88, up about NZ$0.44 on the news.

Is this share sale connected to Xero's recent ASX listing?

Yes. The sale followed the recent listing of Xero shares on the Australian Securities Exchange, which renewed investor interest and optimism about the company's growth outlook.

What did Xero CEO Rod Drury say about the founders selling shares?

Rod Drury noted that founders don't often get opportunities to take money off the table, and added that the US investors involved wanted to buy more — explaining why the founders seized this chance to realise some gains.