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Australia and New Zealand SaaS – Rule of 40
Tech Insights #295
Rule of 40 – Australia & New Zealand
Page 1 of 2
Mergers & acquisitionsCorporate finance advisoryCapital raising
17 July 2023
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Overview
The Rule of 40 is a metric commonly used to evaluate the performance of SaaS companies. The metric combines two key factors: revenue growth rate and EBITDA margin. The metric offers a benchmark that balances revenue growth and profitability. The rule implies a SaaS business is performing well with a 20% revenue growth rate and a 20% EBITDA margin but equally a company can also be seen as performing well with a 50% revenue growth rate and a (10%) EBITDA margin.
Life360
Pointerra
Altium
Bigtincan
Energy One
Praemium
TASK
ReadyTech
Serko
Technology One
Tesserent
WiseTech
ikeGPS
Paysauce
(80%)
(60%)
(40%)
(20%)
-
20%
40%
60%
(50%)
-
50%
100%
150%
200%
LTM EBITDA margin
LTM Revenue growth
Company
Ticker
LTM Revenue growth
LTM EBITDA margin
Rule of 40
EV / LTM Revenue
TASK
ASX:TSK
99%
(6%)
94%
2.6x
Pointerra
ASX:3DP
86%
3%
90%
5.4x
Serko
NZSE:SKO
160%
(73%)
88%
8.2x
WiseTech
ASX:WTC
33%
43%
76%
34.1x
Tesserent
ASX:TNT
59%
10%
69%
1.6x
Bigtincan
ASX:BTH
73%
(8%)
65%
2.0x
Life360
ASX:360
95%
(33%)
61%
4.1x
ikeGPS
NZSE:IKE
93%
(32%)
60%
3.3x
PaySauce
NZSE:PYS
65%
(7%)
59%
5.5x
Altium
ASX:ALU
18%
35%
52%
12.4x
ReadyTech
ASX:RDY
41%
11%
52%
4.7x
Energy One
ASX:EOL
35%
16%
51%
3.7x
Praemium
ASX:PPS
18%
30%
48%
3.7x
Technology One
ASX:TNE
17%
30%
47%
12.2x
Who’s achieving the Rule of 40?
•
14 companies out of 41 included in Clare Capital’s Australia and New Zealand cloud index met the Rule of 40.
•
The axis has been truncated for presentation purposes, affecting companies with an EBITDA margin of less than (60%).
(400%)
Australia SaaS – Rule of 40 over last 3 years
Page 2 of 2
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Disclaimer The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Mergers & acquisitionsCorporate finance advisoryCapital raising
17 July 2023
Tech Insights #295
Rule of 40 – Australia & New Zealand
New Zealand SaaS – Rule of 40 over last 3 years
Large Australia SaaS – Rule of 40 over last 3 years
(9%)
(78%)
9%
(61%)
18%
27%
94%
88%
60%
59%
(100%)
(50%)
-
50%
100%
ikeGPS
PaySauce
3 years ago
2 years ago
Last 12 months (LTM)
(298%)
(157%)
47%
23%
36%
28%
58%
53%
43%
31%
76%
52%
47%
34%
(100%)
(50%)
-
50%
100%
WiseTech
Altium
Technology One
Xero
3 years ago
2 years ago
Last 12 months (LTM)
91%
2%
(0%)
32%
47%
27%
98%
74%
1%
74%
33%
40%
90%
69%
65%
61%
52%
51%
48%
(100%)
(50%)
-
50%
100%
Pointerra
Tesserent
Bigtincan
Life360
ReadyTech
Energy One
Praemium
3 years ago
2 years ago
Last 12 months (LTM)
461%
105%
TASK
Serko
-
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
20.0x
Jun 18
Dec 18
Jun 19
Dec 19
Jun 20
Dec 20
Jun 21
Dec 21
Jun 22
Dec 22
Jun 23
US - Median
US - 12MMA
US - 5yr avg
ANZ - Median
ANZ - 12MMA
ANZ - 5yr avg
Tech Insights #294
Cloud Index as at30 June 2023
Page 1 of 2
Mergers & acquisitionsCorporate finance advisoryCapital raising
10 July 2023
Subscribe and see previous reports at clarecapital.co.nz/tech-insights
Overview
This report looks at valuation metrics for cloud companies publicly listed in the United States, Australia and New Zealand. The indices comprise 90 companies in the United States (US) and 61 in Australia/New Zealand (ANZ). The ANZ Index trades at a significant discount to the US Index, mainly due to the size difference in the enterprise values of the companies that make up both indices. The median EV of US companies is NZD 7.7b versus NZD 152m for ANZ companies. As at30 June 2023, the US Cloud Index is down 5% from the previous quarter to 5.9x EV / NTM revenue and below the five-year average of 10.2x. The ANZ Cloud Index has started gaining momentum, up 15% to 2.8x EV / NTM revenue, but still sits below the five-year average of 4.5x.
NTM revenue multiple for cloud companies listed in the US and ANZ (EV / NTM revenue)
5.9x
2.7x
5.8x
2.8x
ANZ Cloud Index
Median
12MMA
Jun 23
2.8x
2.7x
Mar 23
2.4x
2.8x
Change
15%
(4%)
Jun 22
2.4x
4.3x
Change
15%
(37%)
US Cloud Index
Median
12MMA
Jun 23
5.9x
5.8x
Mar 23
6.2x
5.9x
Change
(5%)
(1%)
Jun 22
5.7x
11.3x
Change
5%
(48%)
Note: NTM = Next 12 months, 12MMA = 12 month moving average
Key:
10.2x
4.5x
-
10.0x
20.0x
30.0x
40.0x
50.0x
Jun 18
Jun 19
Jun 20
Jun 21
Jun 22
Jun 23
90th percentile
75th percentile
Median
25th percentile
-
5.0x
10.0x
15.0x
20.0x
25.0x
Jun 18
Jun 19
Jun 20
Jun 21
Jun 22
Jun 23
Tech Insights #294
Cloud Index as at30 June 2023
Page 2 of 2
Mergers & acquisitionsCorporate finance advisoryCapital raising
10 July 2023
Subscribe and see previous reports at clarecapital.co.nz/tech-insights
NTM revenue multiple for cloud companies listed in US
NTM revenue multiple for cloud companies listed in ANZ
9.1x
5.9x
3.2x
4.0x
2.8x
1.3x
US Cloud Index
25th
75th
90th
30 Jun 2023
percentile
Median
percentile
percentile
EV (NZD $m )
3,452
7,743
23,824
69,232
EV / NTM rev
3.2x
5.9x
9.1x
12.0x
Revenue growth (NTM)
10%
16%
22%
34%
EV / LTM rev
3.5x
6.8x
11.7x
14.7x
Revenue growth (LTM)
14%
24%
35%
50%
Gross margin
67%
74%
79%
87%
Operating margin
(30%)
(15%)
(0%)
18%
FCF margin
7%
14%
24%
34%
ANZ Cloud Index
25th
75th
90th
30 Jun 2023
percentile
Median
percentile
percentile
EV (NZD $m )
31
152
403
1,540
EV / NTM Rev
1.3x
2.8x
4.0x
10.8x
Revenue growth (NTM)
5%
18%
31%
43%
EV / LTM rev
1.3x
2.6x
4.5x
9.3x
Revenue growth (LTM)
4%
26%
61%
86%
Gross margin
21%
52%
75%
93%
Operating margin
(38%)
(5%)
10%
20%
FCF margin
(20%)
1%
11%
28%
Note: The percentiles for each metric are calculated individually. Companies added or removed from each index take effect from the 1st day of the reported quarter.
EV = Enterprise Value, LTM = Last 12 months, NTM = Next 12 months, FCF = Unlevered free cash flow
Disclaimer The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. ClareCapital holds no responsibility over the actual numbers. ClareCapital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
12.0x
10.8x
-
20
40
60
80
100
120
140
160
180
FY20 FY21 FY22 FY23
Australia
USA
NZ
-
2x
4x
6x
8x
10x
12x
14x
16x
FY20 FY21 FY22 FY23
EV/revenue
EV/EBITDA
Tech Insights #293
EROAD takeover
Mergers & acquisitions
Corporate finance advisory
Capital raising
3 July 2023
Overview
This Tech Insights report looks at the recent proposed full takeover for EROAD by Constellation Software (via Brillian, a subsidiary of Volaris Group). The takeover offer has been
made at an interesting time where EROAD has experienced significant revenue growth in the US. In this report, we take a look at EROAD’s financial metrics to date, how the
offer matches against comparable companies and transactions, and an overview of Constellation Software’s recent acquisition activities in the Australasian region.
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EROAD geographic revenue breakdown (NZD $m)
EROAD share price (NZD $)
-
1
2
3
4
5
6
7
8
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23
Coretex
acquisition
announcement at
4.3x EV/Rev. Volaris Group
makes indicative
offer
EROAD EV/revenue and EV/EBITDA multiples
84%
growth in
USA
Transaction summary
Offer summary
Parties
involved
Valuation offer
Events to date
Constellation Software (via Brillian, a subsidiary of Volaris
Group) has made a takeover offer at NZD $1.30/share
for EROAD
Acquirer Target
Market capitalisation (NZD $m): $147m
Net debt (NZD $m): $70m
Enterprise value (NZD $m): $217m
30 May: 4m shares acquired by Volaris @ 77cents/share
21 June: c. 16m shares acquired by Volaris @ 1.30/share
Current acquired interest for Volaris: 17.7% of total shares
Brillian
1.2x proposed
- 1x 2x 3x 4x 5x 6x 7x
WiseTech/Containerchain (Feb 19)
Bridgestone/TomTom Telematics (Apr 19)
CalAmp/Synovia Solutions (Apr 19)
Geotab/BSM Technologies (May 19)
GI Manager/ORBCOMM (Sep 21)
EROAD/Coretex (Dec 21)
Fabric IOT/Intellicar Telematics (May 22)
Volaris Group/EROAD (Jun 23)
Tech Insights #293
EROAD takeover
Disclaimer The information provided in this report has been sourced and calculated from S&P Global Market Intelligence and company annual reports. Clare Capital holds no
responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised
financial advice.
Mergers & acquisitions
Corporate finance advisory
Capital raising
3 July 2023
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Comparable transactions EV/revenue multiples
Australasian acquisitions made by Constellation Software between 2019 and 2023
4
Mean
3.8x
Australasian comparable company metrics to pre-announcement
Metrics NZX:
ERD
NZX:
ERD
NZX:
GTK
NZX:
IKE
NZX:
SKO
NZX:
VGL
NZX:
RAK
ASX:
XRO
ASX:
CXZ
EV/Rev 0.9x 1.2x 2.6x 3.5x 7.6x 2.8x 1.1x 13.9x 2.6x
EV/EBITDA 3.6x 4.7x 17.6x NM NM NM 4.7x 122.8x 26.6x
Rev growth
LTM 52.2% 52.2% 37.3% 92.9% 160.4% 37.7% 4.9% 27.6% 9.6%
SaaS gross
margin 85.1% 85.1% NA 53.1% 77.5% 62.5% NA 87.3% 71.0%
EBITDA
margin 25.8% 25.8% 14.9% NM NM NM 23.4% 11.3% 9.8%
Acquirer Target Industry Date Public/Private
N. Harris Computer CIM IT May-23 Private
Datamine Australia LandTrack Systems IT Dec-22 Private
N. Harris Computer Ternity Group Other Dec-22 Private
N. Harris Computer MCATS Healthcare Jun-22 Private
Jonas Software Seekom IT Dec-21 Private
Volaris Group AMS IT Nov-21 Private
Volaris Group Decideware IT Oct-21 Private
Vela Software Figtree Systems IT Jun-21 Private
N. Harris Computer Meridian Health Info. Healthcare Oct-20 Private
Acquirer Target Industry Date Public/Private
Volaris Group Infoview Technologies IT Sep-20 Private
Vela Software KRISP Systems (asset) IT Aug-20 Private
Vela Software Foresiight IT Feb-20 Private
Volaris Group Musac Holdings Other Feb-20 Private
Petrosys Globe Claritas IT Nov-19 Private
Jonas Software Impos Solutions IT Nov-19 Private
G. Jonas Computing Pacsoft International IT Oct-19 Private
Jonas Software Happen Business IT Feb-19 Private
Smartrak Holdings Lingo Systems (asset) IT Feb-19 Private
Pre-announcement
Overview
TASK (previously known as Plexure) is a leading point-of-sale mobile engagement
software company. Following the Plexure and TASK merger in 2021:
• TASK executives took over the management of the group.
• Plexure division revenue increased reflecting new commercial terms with
McDonald’s, increased user numbers and customer engagement.
• The combined team was right-sized, driving efficiencies and increasing revenue
per FTE.
• EBITDA became positive in FY23.
TASK has recently announced they are set to delist from the NZX, after shifting
their primary listing to the ASX last year.
Annual revenue (pre and post merger)
17
26 29 26
18 48
14
14 14
17
-
20
40
60
80
FY19 FY20 FY21 FY22 FY23
NZD $m TASK
Plexure
Tech Insights #292
Up to the TASK?
Page 1 of 2
Mergers & acquisitions
Corporate finance advisory
Capital raising
26 June 2023
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Annual adjusted EBITDA
TASK / Plexure
merger
Pre merger (FY19, FY20 and FY21) Plexure had a March financial year end and
TASK had a June financial year end. FY22 and FY23 are March year. Note - FY22
TASK revenue for H1 (pre merger) is an estimate.
6.9
1.6
(5.8)
(15.0)
9.9
(20)
(15)
(10)
(5)
-
5
10
FY19 FY20 FY21 FY22 FY23
NZD $m
Group EBITDA TASK EBITDA Plexure EBITDA
EBITDA has been adjusted for the non-cash impact of employee share schemes
and any capitalised development costs. Pre merger TASK and Plexure EBITDA
(Group EBITDA) have been combined for FY19, FY20 and FY21.
-
100
200
300
400
-
100
200
FY21 FY22 FY23
Revenue per FTE (NZD $000s)
FTE
FTE Revenue per FTE (NZD $000s)
Revenue per FTE (TASK and Plexure combined)
FTE headcount includes TASK and Plexure staff for all periods. Pre merger
TASK and Plexure revenues have been combined for FY21 and FY22.
-
0.50
1.00
1.50
2.00
Jan-18 Jul-18 Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23
Share price (NZD $)
TASK share price and history (NZX)
Oct-21
Plexure
acquired TASK
May-23
Announcement
TASK is set to
delist from NZX
Aug-22
Primary listing
shifted to ASX and
renamed Task
Group Holdings
Apr-19
McDonald’s
purchased a 9.9%
equity stake
Nov-20
Plexure commenced
trading on ASX
5 largest shareholders (pre and post merger)
The majority of the deal was structured as equity (70%). TASK co-founders Jennifer
and Kym Houden now collectively hold 35% of total capital. McDonald’s initially
invested in Plexure in 2019 and was supportive of the TASK transaction. McDonald’s
has a top-up right to maintain a 9.9% holding, however this has not been exercised.
FY21 (as of Mar 21) FY23 (as of Mar 23)
Shareholder and % issued Shareholder and % issued
1 Forsyth Barr Custodians (NRL) 10.4% Jennifer Anne Houden 17.5%
2 McDonald’s (Atlas Bear) 9.5% Kym Houden 17.5%
3 Allectus Capital Limited 7.3% NZ Depository Nominee Limited 8.4%
4 Forsyth Barr Custodians (E) 3.1% Forsyth Barr Custodians (NRL) 6.5%
5 NZ Depository Nominee Limited 3.1% McDonald’s (Atlas Bear) 5%
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Disclaimer The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the
actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Mergers & acquisitions
Corporate finance advisory
Capital raising
26 June 2023
Tech Insights #292
Up to the TASK?
Key customer contracts
Historically the company has been dependent on a single large customer,
McDonald’s. Following a renegotiation of the McDonald’s contract and launch of the
new white label app – the customer mix is becoming more diversified.
McDonald’s Renegotiation of commercial terms and new
five year contract (from 1 Aug 2022).
Starbucks
Launch of global end-to-end platform and
white label Mobile Order and Pay app (2023).
Starbuck’s Australia is the first customer.
Pizza Capers
& Crust
Expanded contract and entry into quick service
restaurant (QSR) pizza vertical.
-
50
100
150
200
250
300
- 1 2 3 4 5 6 7
AUD $m
Year
Annual revenue growth profiles (AUD $m)
Tech Insights #291
T2D3
Page 1 of 2
Mergers & acquisitions
Corporate finance advisory
Capital raising
19 June 2023
Overview
T2D3 is a growth target for SaaS businesses (initially published by Battery Ventures). This strategy aims for a tripling of annual revenue for two years, then doubling for the next
three (triple, triple, double, double, double). T2D3 profile produces a path to AUD $144m annual revenue in less than 5 years. T2D3 is hard to achieve and only a few companies
satisfy this growth profile. This Tech Insights report explores which ASX listed tech companies have achieved these profiles. Note all values in this report are in AUD $m.
T2D3
$100m 7yrs
$50m 7yrs
Seek, Xero and Pushpay growth profiles (initial 7 years)
These companies have experienced strong and fast growth. Enterprise Values (EV) after
initial 7 years were: Seek $5.3b (2013), Pushpay $1.5b (2023) and Xero $7.1b (2019). Year 1
begins when a company’s annual revenue exceeds $2m AUD (i.e., not necessarily in the
year they IPO).
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7
SEEK
Pushpay
T2D3
growth:
Triple
$2m to
$6m
Triple
to
$18m
Double
to
$36m
Double
to
$72m
Double
to
$144m
$100m+
annual
revenue
by year 7:
$1m $2m $4m $9m $20m $44m $100m
$50m+
annual
revenue
by year 7:
$1m $2m $3m $6m $13m $25m $50m
These growth profiles are a useful way to measure a company's historic growth
and are used as a guide for companies aiming to scale. T2D3 profile is the main
goal, however in practice this can be hard to achieve.
Two further growth profiles which can be used to measure growth is a $100m
annual revenue target within 7 years and a $50m annual revenue target within
7 years.
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Tech Insights #291
T2D3
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Disclaimer The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the
actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions, you should seek appropriate personalised financial advice.
Mergers & acquisitions
Corporate finance advisory
Capital raising
19 June 2023
Overview
This table looks at selected listed ASX tech companies and compares their historic growth against the frameworks outlined on page 1. We have noted companies achieving
T2D3 where $144m AUD annual revenue was achieved by year 5 (once reaching the $2m annual revenue threshold). Revenue growth includes growth via acquisitions. *As
Pushpay is no longer listed, ‘current EV’ is noted as the implied acquisition enterprise value as at April 2023.
Revenue Revenue growth Margin (LTM) Rev multiple Growth target achieved?
Name Ticker IPO date Current EV LTM NTM LTM NTM EBITDA 40% rule LTM NTM T2D3 $100m rev $50m rev
Pushpay Holdings* ASX:PPH Aug 14 1,547 330 NA 28% NA 23% 51% 4.7x NA Y Y Y
Xero Limited ASX:XRO Jun 07 16,958 1,308 1,570 29% 20% 4% 32% 13.0x 10.8x Y Y
SEEK Limited ASX:SEK Apr 05 9,634 1,226 1,258 29% 3% 31% 59% 7.9x 7.7x Y Y Y
WiseTech Global ASX:WTC Apr 16 24,401 729 938 33% 29% 29% 62% 33.5x 26.0x Y Y Y
Computershare ASX:CPU May 94 15,928 4,286 4,837 33% 13% 16% 49% 3.7x 3.3x Y Y Y
carsales.com ASX:CAR Sep 09 10,009 599 894 27% 49% 38% 65% 16.7x 11.2x Y Y
NEXTDC ASX:NXT Dec 10 7,220 306 386 14% 26% 46% 60% 23.6x 18.7x Y Y
Domain Group ASX:DHG Nov 17 2,422 368 386 12% 5% 20% 32% 6.6x 6.3x Y Y Y
Iress ASX:IRE Nov 00 2,309 618 637 4% 3% 19% 23% 3.7x 3.6x Y
Dicker Data ASX:DDR Jan 11 1,812 3,104 3,392 25% 9% 4% 29% 0.6x 0.5x Y Y Y
PSC Insurance Group ASX:PSI Dec 15 1,789 268 312 17% 16% 29% 46% 6.7x 5.7x Y Y
Link Administration ASX:LNK Oct 15 1,404 1,174 1,163 1% (1%) 10% 11% 1.2x 1.2x Y Y Y
Codan ASX:CDA Nov 03 1,365 461 449 (8%) (3%) 33% 25% 3.0x 3.0x Y Y
Life360 ASX:360 May 19 1,252 366 483 95% 32% (17%) 78% 3.4x 2.6x Y Y Y
Data#3 ASX:DTL Dec 97 1,087 2,358 2,692 12% 14% 2% 14% 0.5x 0.4x Y Y
Megaport ASX:MP1 Dec 15 1,084 124 177 33% 42% (25%) 7% 8.7x 6.1x Y
SiteMinder ASX:SDR Nov 21 790 133 170 26% 27% (20%) 6% 5.9x 4.7x Y
Tyro Payments ASX:TYR Dec 19 566 397 443 46% 11% (3%) 43% 1.4x 1.3x Y Y Y
FINEOS Corporation ASX:FCL Aug 19 522 194 211 2% 9% (6%) (3%) 2.7x 2.5x Y Y
Appen ASX:APX Jan 15 440 571 492 (7%) (14%) 18% 11% 0.8x 0.9x Y Y
ReadyTech ASX:RDY Apr 19 389 90 112 41% 24% 15% 56% 4.3x 3.5x Y
Vista Group ASX:VGL Aug 14 292 126 133 36% 6% (3%) 33% 2.3x 2.2x Y
Nuix ASX:NXL Dec 20 275 156 171 (11%) 10% 54% 43% 1.8x 1.6x Y Y
Bigtincan ASX:BTH Mar 17 273 122 134 73% 10% (14%) 59% 2.2x 2.0x Y
Bravura Solutions ASX:BVS Nov 16 210 253 242 (3%) (4%) 24% 22% 0.8x 0.9x Y Y
Mean 4,159 787 903 24% 14% 13% 37% 6.4x 5.3x
Median 1,365 368 446 26% 11% 16% 33% 3.7x 3.2x
Tech Insights #290
International acquirers
Mergers & acquisitions
Corporate finance advisory
Capital raising
12 June 2023
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Overview
There have been over 3,700 M&A deals completed in New Zealand since the end of 2010, with a large number completed by international acquirers. In this weeksTech Insights report we take a lookat the top ten most acquisitive companies of New Zealand businesses, whose ultimate parent company exists outside of Aotearoa. We give an overview of who these businesses are, the types of businesses they acquire, and present some other interesting metrics.
Arthur J. Gallagher & Co. (NYSE:AJG) is an American firm headquartered in Illinois, established in 1927 and is one of the largest insurance brokers in the world with a market cap. of NZD $72 billion.
EQT, founded in 1994, is a €210 billion Swedish global investment firm, investing in private equity, infrastructure, real estate, and venture capital.
Vocus Group is an international telecommunications company headquartered in Sydney, Australia.In June 2021, the business was acquired by Macquarie Infrastructure for NZD $3.7 billion.
BayWa AG, (XTRA:BYW) an NZD $2.4 billion market cap. agricultural trading and services company headquartered in Munich. BayWA AG operates internationally, specialising in agriculture, energy, and construction.
Centuria Capital Group (ASX:CNI) is anASX-listed real estate investment managerwith a 35-year track-record, AUD $21.2 billion in assets under management and an NZD $1.4 billion market cap.
KKR & Co., (NYSE:KKR) is an American global investment company that manages multiple alternative asset classes, including private equity and hedge funds, with a market cap of NZD $77.6 billion.
AUB Group (ASX:AUB) isan NZD $3 billion market cap. ASX-listed company comprising insurance brokers and underwriting agencies operating in 450 locations across Australasia.
WPP (LSE:WPP) is a multinational advertising and public relations company headquartered in London and is one of the world’s largest communications service groups with a market cap. of NZD $18.9 billion.
Constellation Software (TSX:CSU) is a Canadian diversified software company and is listed on the Toronto Stock Exchange with a current market cap. of NZD $70 billion.
The Ontario Teachers' Pension Plan Board (OTPPB) is a leading pension fund in Canada, managing the retirement savings of over 300k active and retired teachers, with NZD $289 billion in funds under management.
Tech Insights #290
International acquirers
Mergers & acquisitions
Corporate finance advisory
Capital raising
12 June 2023
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Disclaimer The information provided in this report has been sourced from S&P Global Market Intelligence. Clare Capital holds no responsibility over the actual numbers.
Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Deal statistics
•
73 transactions were completed in total by the ten acquirers, 40 of which had terms disclosed. 83% were cash only, 10% were for stock, and 8% a mix of both.
•
Of the 40 disclosed transactions, 68% were paid all upfront, 15% included a contingent payment and 17% a non-contingent payment.
•
The largest disclosed transaction by size was by EQT Partners with its purchase of Metlifecare for NZD $1.6 billion.
•
Unsurprisingly, the majority of acquired companies were from Auckland (48%), Wellington (15%), and (10%) Christchurch.
•
Of all the transactions we looked at, 20% of acquirers have acquired more than one business.
Number of transactions by year
-
2
4
6
8
10
12
14
16
18
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Transactions by industry
-
5
10
15
20
Financials
Information Technology
Industrials
Communication Services
Health Care
Consumer Staples
Real Estate
Utilities
Consumer Discretionary
Advised Heyday on its sale to JWT / WPP.
Advised Seekom on its sale to Jonas / Constellation Software.
Number of transactions by acquirer
-
2
4
6
8
10
AUB Group
KKR & Co.
Arthur J. Gallagher & Co.
Centuria Capital
Constellation Software
EQT Partners
BayWa AG
Vocus Group
WPP
OTPPB
Colours in the left-hand side chart reflect the industries in the right-hand side chart.
#289 VC & PE funds raised
Tech Insights #289
VC & PE funds raised
Mergers & acquisitions
Corporate finance advisory
Capital raising
29 May 2023
Page 1 of 2
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Overview
In this week’s Tech Insights report we delve into a brief history of New Zealand private equity and venture capital funds raisedover time. New Zealand venture capital firm Movacrecently announced it closed its sixth fund after raising a total of NZD $202 million, which in the current environment is a great outcome. As the chart below shows, the level of private equity and venture capital has materially grown in recent times. Note this analysis doesn’t include co-investment vehicles which increase the total funds further.
Funds raised (NZD $m)
1990
1995
2000
2005
2010
2015
2020
2025
Direct Capital
Pencarrow
Pioneer Capital
Movac
Waterman
GD1
Blackbird Aotearoa
Oriens Capital
Icehouse Ventures
Nuance Capital
Pacific Channel
Hillfarrance
400
50
Size of bubble represents fund size (NZD millions)
Tech Insights #289
VC & PE funds raised
Mergers & acquisitions
Corporate finance advisory
Capital raising
29 May 2023
-
1,000
2,000
3,000
4,000
5,000
6,000
1993
1998
2003
2008
2013
2018
2023
VC
PE
Who
Type
Raised ($m)
Funds
Currentinvestments
Exits
Direct Capital
PE
1,358
6
8
31
Pencarrow PE
PE
992
7
10
13
Pioneer Capital
PE
776
4
14
14
Movac
VC
655
6
39
10
Waterman PC
PE
513
4
6
11
GD1
VC
195
3
27
1
Blackbird Aotearoa
VC
134
2
Oriens Capital
PE
130
2
7
2
Icehouse Ventures
VC
110
1
Nuance Capital
VC
57
1
6
0
Pacific Channel
VC
50
1
38
7
Hillfarrance
VC
36
1
15
0
Fund statistics
Page 2 of 2
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Total funds raised ($m)
DisclaimerThe information provided in this report has been sourced and calculated from public information from fund websites. ClareCapital holds no responsibility over the actual numbers. ClareCapital is not an Authorised Financial Adviser. If you are making investment decisionsyou should seek appropriate personalised financial advice.
Highlights
•
Average years between private equity fund raises 4.9 years
•
Average years between venture capital fund raises 4.2 years
•
Average private equity fund size $165 million
•
Average venture capital fund size $74 million
2006: Sale of TradeMe
2007: Xero IPO and KiwiSaver introduced.
Note: we’re unable to determine current and past investments from Blackbird Aotearoa and Icehouse’s websites, as a result this information is left blank.
#288 Activision Blizzard acquisition
Tech Insights #288
Activision Blizzard acquisition
Page 1 of 2
Mergers & acquisitions
Corporate finance advisory
Capital raising
22 May 2023
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Overview
In January 2022, Microsoft announced it was acquiring listed video game developer Activision Blizzard at an implied Enterprise Value of USD $69B. The acquisition of Activision
Blizzard would allow Microsoft to add more titles to its subscription platform; Game Pass. Approval of the deal is going through various international regulators, with concern
about Microsoft (the makers of Xbox) leveraging the content of Activision Blizzard (Call of Duty, World of Warcraft, etc.) in a potentially anti-competitive way. It will be
interesting to see whether this deal completes, and if not, who stops it.
-
20%
40%
60%
80%
100%
-
2
4
6
8
10
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Product sales
In-game, subscription & licensing
EBITDA margin
Gross margin
-
2
4
6
8
10
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
USA United Kingdom Asia Pacific Other
-
100
200
300
400
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23
Activision Blizzard Microsoft
Activision Blizzard revenue split (USD $B) and margins Activision Blizzard revenue by geography (USD $B)
Share price index
Deal announced
December year end
UK regulators move to
block the deal
Tech Insights #288
Activision Blizzard acquisition
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Disclaimer The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the
actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Enterprise value / LTM EBITDA
Mergers & acquisitions
Corporate finance advisory
Capital raising
22 May 2023
-
5x
10x
15x
20x
25x
30x
35x
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23
Activision Blizzard Microsoft
-
2x
4x
6x
8x
10x
12x
14x
16x
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23
Activision Blizzard Microsoft
Company Country Top game EV Revenue EBITDA Revenue growth Gross margin EBITDA margin EV/Revenue EV/EBITDA
Activision Blizzard USA Call of Duty 52,832 8,143 2,091 -2% 70% 26% 6.5x 25.3x
EA USA FIFA 33,572 7,426 2,099 6% 77% 28% 4.5x 16.0x
Take-Two USA GTA 25,654 5,350 432 53% 43% 8% 4.8x 59.4x
Nexon Japan MapleStory 15,145 2,861 988 40% 69% 35% 5.3x 15.3x
Bandai Namco Japan Tekken 14,292 7,325 1,092 11% 37% 15% 2.0x 13.1x
Capcom Japan Resident Evil 7,836 932 401 14% 59% 43% 8.4x 19.5x
Konami Japan Pro Evolution 6,583 2,325 569 5% 39% 24% 2.8x 11.6x
Square Enix Japan Final Fantasy 4,658 2,539 379 -6% 51% 15% 1.8x 12.3x
Ubisoft France Assassin's Creed 4,331 1,890 833 -15% 88% 44% 2.3x 5.2x
CD Projekt Poland The Witcher 2,498 214 95 7% 74% 44% 11.7x 26.3x
Median 11,064 2,700 701 7% 64% 27% 4.7x 15.7x
Enterprise value / LTM revenue
Listed comparators USD $M (LTM financials)
#287 Leadership positions by gender
Tech Insights #287
Leadership positions by gender
Mergers & acquisitions
Corporate finance advisory
Capital raising
15 May 2023
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Overview
In this Tech Insights report we look at leadership positions (CEOs, Directors and Chairs) by gender across NZX50 and ASX200 listed companies. Interestingly the NZX50 has
greater female representation at a board level than the ASX200 while the ASX200 has more female CEOs. Using revenue and market cap. as a measure of scale, female
CEOs tend to lead larger companies on the ASX200, while the opposite is true for female CEOs of NZX50 listed companies.
Key positions by gender (NZX50) Key positions by gender (ASX200)
Highlights (NZX50)
• There are 340 board members on NZX50 companies. 128 are female and
212 are male.
• The most common board composition for NZX50 companies is 3:4 females
to males with ten boards having this composition.
• Neither the NZX50 or ASX200 indices have an industry where females are
represented more than males on the board of directors.
• Only Contact Energy’s board comprises more females than males. All
NZX50 companies have at least one female board member.
Highlights (ASX200)
• There are 1,510 board members on ASX200 companies. 543 are female
and 967 are male.
• The most common board composition for ASX200 companies is 3:5
females to males.
• Within the ASX200, ten company boards have more females than males,
and three have no female representation.
72%
62%
92%
28%
38%
8%
- 20% 40% 60% 80% 100%
Chair
Director
CEO
Male Female
90%
64%
89%
10%
36%
11%
- 20% 40% 60% 80% 100%
Chair
Director
CEO
Male Female
Tech Insights #287
Leadership positions by gender
Mergers & acquisitions
Corporate finance advisory
Capital raising
15 May 2023
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Disclaimer The information provided in this report has been sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the actual
numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Director gender count by GICS industry (NZX50) Director gender count by GICS industry (ASX200)
CEO by gender revenue and market cap. weighted (NZX50) CEO by gender revenue and market cap. weighted (ASX200)
-
5
10
15
20
25
30
35
40
Industrials
Financials
Real estate
Health care
Energy
Communication
services
Utilities
Consumer staples
Consumer
discretionary
Information
technology
Media and
entertainment
Materials
Male Female
-
50
100
150
200
250
Industrials
Financials
Real estate
Health care
Energy
Communication
services
Utilities
Consumer staples
Consumer
discretionary
Information
technology
Media and
entertainment
Materials
Male Female
92%
8%
Market Cap.
Male Female
95%
5%
Revenue
Male Female
84%
16%
Revenue
Male Female
83%
17%
Market Cap.
Male Female
#286 Bed Bath & Beyond
Bed Bath & Beyond market cap
Page 1 of 2
Mergers & acquisitions
Corporate finance advisory
Capital raising
8 May 2023
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Overview
Bed Bath & Beyond was founded in New Jersey in 1971, growing to have more than 1,000 stores across North America. A fall in sales and an increase in debt has resulted in the
firm’s demise, as shown in the graphs in this Tech Insights report. Note: the New Zealand namesake bears no relation to the North American Bed Bath & Beyond.
-
2
4
6
8
10
12
14
16
18
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
USD $b
Quarterly revenue (Feb year end) Share price and daily shares traded (since the start of 2023)
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3
FY18 FY19 FY20 FY21 FY22 FY23
USD $b
-
100
200
300
400
500
600
700
800
900
1,000
-
1
2
3
4
5
6
Jan Feb Mar Apr
Daily shares traded (million)
Share price USD
-
2x
4x
6x
8x
10x
12x
14x
16x
18x
2015 2016 2017 2018 2019 2020 2021 2022 2023
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Disclaimer The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the
actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Mergers & acquisitions
Corporate finance advisory
Capital raising
8 May 2023
EBITDA margin and gross margin Net debt to LTM EBITDA
Enterprise value multiples (LTM) Market cap vs Net debt (USD $b)
(30%)
(20%)
(10%)
-
10%
20%
30%
40%
Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3Q4 Q1 Q2Q3
FY18 FY19 FY20 FY21 FY22 FY23
LTM
EBITDA
went
negative
-
5x
10x
15x
20x
-
0.2x
0.4x
0.6x
0.8x
1.0x
1.2x
2015 2016 2017 2018 2019 2020 2021 2022 2023
EV/Revenue EV/EBITDA
(4)
(2)
-
2
4
6
8
10
12
14
2015 2016 2017 2018 2019 2020 2021 2022 2023
Market cap +
Net debt =
Enterprise value
#285 Pre-covid vs current economic indicators
Mergers & acquisitions
Corporate finance advisory
Capital raising
1 May 2023
Overview
This Tech Insights report looks at and compares various economic indicators for a selection of countries for the period between pre-covid (2019) and current available data. The
first page looks at the inflation and policy rates for these countries while the second page explores money supply, debt levels and public market performance. Note money
supply refers to the total amount of money in circulation within a specific economy or country. It is essentially the amount of money that is available for people and businesses to
spend and use in transactions. M3 is the broadest measure and includes less-liquid assets as part of its categorisation.
Inflation rates vs policy rates for a selection of countries between 2019 and latest available
(1%)
-
1%
2%
3%
4%
5%
6%
7%
2% 4% 6% 8% 10% 12%
Inflation rate (%)
Central bank rate (%)
2019 Latest
Policy rate
This is the rate that is used by the country’s central
bank to implement or signal its monetary policy
stance. For example, OCR for NZ, the Fed Funds
rate for the US and the BoE rate for the UK.
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Percentage change in money supply (M3) over time
Disclaimer The information provided in this report has been sourced and calculated from Trading Economics, IMF and S&P Global Market Intelligence. Clare Capital holds no
responsibility over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised
financial advice.
Mergers & acquisitions
Corporate finance advisory
Capital raising
1 May 2023
Market indices for a selection of countries
(25%)
-
25%
50%
75%
100%
Jan-19 Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23
S&P 500
STOXX Europe 600
FTSE 100 (GBP)
CSI 300 Index
BSE India Sensex 30 Index
Nikkei 225
NZX 50
S&P ASX 200
Country 2009 – 2019 CAGR YoY growth 2020/2021
United Kingdom 2.8% 12.5%
United States 6.1% 25.7%
European Union 3.3% 11.7%
Japan 2.6% 7.9%
New Zealand 5.7% 11.3%
Australia 6.2% 9.3%
India 11.8% 11.1%
China 14.9% 9.4%
Gross government debt to GDP between 2019 and latest available
- 50% 100% 150% 200% 250% 300%
United Kingdom
United States
European Union
Japan
New Zealand
Australia
India
China
2019 Latest
China
UK
US
India
Japan
Jan 19 Jul 19 Jan 20 Jul Jan 21 Jul Jan 22 Jul 22 Jan BSE India Sensex 30 Index
S&P 500
Nikkei 225
STOXX Europe 600
CSI 300 Index
ASX 200
NZX 50
FTSE 100
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#284 SaaS expenses
Page 1 of 2
Mergers & acquisitions
Corporate finance advisory
Capital raising
24 April 2023
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Overview
This Tech Insights report looks at the four SaaS expense categories as a % of total expenses. We use a dataset of global SaaS companies on the first page and split companies
into four groups based on revenue. We then compare the average expense ratios across each of these groups. On the second page we look at three SaaS companies from
ANZ. We track these company’s expense ratios over the last eight years relative to their revenue and EBITDA margins.
37% 35%
27%
36%
19% 27%
35%
31%
19%
19%
22%
22%
26%
20% 16%
10%
-
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
< $50m $50m -
$300m
$300m -
$1b
> $1b
% of total expenses
G&A
R&D
CAC
CTS
31%
30%
22%
17%
-
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Data set median
SaaS company expenses as a % of total expenses (LTM)
General & Administration (G&A)
Expenses related to any overhead and corporate costs not
related to R&D, CAC or CTS. This includes rent and finance &
accounting salaries.
Research & Development (R&D)
Expenses related to the development of the software product
and/or platform, specifically the wages & salaries of engineers
and developers directly related to product development.
Customer Acquisition Costs (CAC)
Sales & Marketing (S&M) as it is commonly referred to in non-
SaaS terms, is an expense related to acquiring the customer,
which typically includes sales salaries, marketing initiatives and
onboarding.
Cost to Serve (CTS)
Cost of Sales (COS) as it is commonly referred to in non-SaaS
terms, is an expense related to servicing, hosting (AWS, Azure,
etc.) and supporting the customer.
Data set groupings are based on revenue (USD)
There are 40-60 companies in each band.}
Xero (% of total expenses)
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Disclaimer The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the
actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Mergers & acquisitions
Corporate finance advisory
Capital raising
24 April 2023
-
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2023
G&A
R&D
CAC
CTS
-
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2023
-
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2015 2023
WiseTech Pushpay
Xero (revenue and EBITDA margin) WiseTech Pushpay
-
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
-
100
200
300
400
500
600
2015 2023
-
2%
4%
6%
8%
10%
12%
14%
-
100
200
300
400
500
600
700
800
2015 2023
EBITDA margin
Revenue USD $m
-
5%
10%
15%
20%
25%
30%
35%
-
50
100
150
200
250
2015 2023
#283 - Cloud Index as at 31 March 2023
-
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
20.0x
Mar 18 Sep 18 Mar 19 Sep 19 Mar 20 Sep 20 Mar 21 Sep 21 Mar 22 Sep 22 Mar 23
US - Median
US - 12MMA
ANZ - Median
ANZ - 12MMA
Page 1 of 2
Mergers & acquisitions
Corporate finance advisory
Capital raising
17 Apr 2023
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Overview
This report looks at valuation metrics for cloud companies publicly listed in the United States, Australia and New Zealand. The index consists of 92 companies in the United
States (US) and 44 companies in Australia/New Zealand (ANZ). It is worth noting that there is a significant company size difference between the two indices, with the median
EV of US companies at $7.5b NZD versus $0.2b NZD for ANZ companies. As at 31 March 2023, the US Cloud index has regained some of the ground lost over the past year, up
25% from the previous quarter to 6.2x EV / NTM revenue. The ANZ Cloud index has not followed suit and is at a five-year low of 2.4x EV / NTM revenue.
NTM Revenue Multiple for Cloud Companies Listed in the US and ANZ (EV / NTM Revenue)
6.2x
2.4x
5.9x
2.8x
ANZ Cloud Index
Median 12MMA
Mar 23 2.4x 2.8x
Dec 22 2.9x 3.2x
Change (17%) (10%)
Mar 22 3.8x 5.0x
Change (37%) (43%)
US Cloud Index
Median 12MMA
Mar 23 6.2x 5.9x
Dec 22 5.0x 6.8x
Change 25% (14%)
Mar 22 8.7x 13.1x
Change (29%) (55%)
Note: NTM = Next 12 months, 12MMA = 12 month moving average
Key:
-
4.0x
8.0x
12.0x
16.0x
Mar 18 Mar 19 Mar 20 Mar 21 Mar 22 Mar 23
25th Percentile
Median
75th Percentile
Page 2 of 2
Mergers & acquisitions
Corporate finance advisory
Capital raising
17 Apr 2023
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NTM Revenue Multiple for Cloud Companies Listed in US NTM Revenue Multiple for Cloud Companies Listed in ANZ
8.3x
6.2x
3.4x
4.3x
2.4x
1.1x
US Cloud Index 25th 75th 90th
31 Mar 2023 Percentile Median Percentile Percentile
EV (NZD $m ) 2,639 7,503 20,375 68,548
EV / NTM Rev 3.4x 6.2x 8.3x 10.2x
Revenue Growth (NTM) 10% 16% 23% 33%
EV / LTM Rev 3.7x 7.0x 9.8x 12.5x
Revenue Growth (LTM) 16% 26% 38% 56%
Gross Margin 66% 73% 79% 87%
Operating Margin (33%) (17%) (3%) 16%
FCF Margin 4% 13% 22% 33%
ANZ Cloud Index 25th 75th 90th
31 Mar 2023 Percentile Median Percentile Percentile
EV (NZD $m ) 67 212 751 3,638
EV / NTM Rev 1.1x 2.4x 4.3x 10.4x
Revenue Growth (NTM) 4% 13% 28% 36%
EV / LTM Rev 1.2x 2.8x 5.1x 12.4x
Revenue Growth (LTM) 1% 18% 46% 82%
Gross Margin 35% 59% 86% 95%
Operating Margin (31%) (5%) 11% 28%
FCF Margin (14%) 1% 13% 29%
Note: The percentiles for each metric are calculated individually.
EV = Enterprise Value, LTM = Last 12 months, NTM = Next 12 months, FCF = Unlevered free cash flow
Disclaimer The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the
actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
-
10.0x
20.0x
30.0x
40.0x
Mar 18 Mar 19 Mar 20 Mar 21 Mar 22 Mar 23
#282 Strategic vs Financial acquirers
Target companies will usually know who their potential
acquirers are as strategic acquirers are likely to be from the
same or complementary industry.
The target will be valued on its products, assets, financials and
any synergies it can bring to the acquirer.
A financial acquirer may approach a target company if their
financial performance (e.g. how much revenue they generate) is
publicly known.
Likely to be valued in the following ways:
• the present value of the target’s cash flows (calculated
through a discounted cash flow analysis)
• valued on a multiple of revenue or earnings (e.g. EBITDA).
The highest valuation is typically found when the target
company is approached by a strategic acquirer. This could be
because of the target’s perceived market position, its
intellectual property or the acquiring company is unable to
replicate the target’s product suite.
Financial performance plays less of a role in the overall
acquisition rationale.
A financial acquirer is likely to focus strongly on the underlying
financials of the business.
The financial acquirer is predominately buying the target for
how much cash it can generate in the future and/or if it can onsell
the target’s products to existing customers.
Competition among potential acquirers in the sales process can
increase the price received.
Page 1 of 2
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Overview
This Tech Insights report highlights key differences between the two types of acquirers - financial and strategic. The matrix on the first page details the difference between a
strategic and financial acquirer and the impact of the way the sale is initiated (i.e. an acquirer makes an unsolicited approach to purchase the company, or a process is run to
find a buyer). The highest value outcomes are typically when a company is “bought not sold”. The second page highlights Seequent’s growth journey since 2014, in relation to an
acquisition multiple framework.
Target runs process to find interested buyer Buyer approaches target company
Strategic acquirer
a company that will
acquire a business for
operational reasons
Financial acquirer
a company that will
acquire a business
because of financial
performance
Page 2 of 2
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3 April 2023
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actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Acquisition multiple framework - Seequent transaction pricing journey example
EBITDA multiple Revenue multiple
Exit
100% sale to Bentley Systems (2021)
Seequent’s world-leading solutions for below ground infrastructure
compliments Bentley’s expertise in above ground infrastructure. The strategic
revenue multiple recognises the full value of Seequent.
Seequent was sold to Bentley Systems in a deal valued at
NZD $1,445m (~12x revenue)
Sale
Sale to Accel-KKR (2018)
Additional capital enabled Seequent’s acquisition of Geosoft. Seequent
becomes the market leader in subsurface geoscience and modelling solutions.
Approximate value between NZD $232m - $542m
Capital raising
Pencarrow invested 40% into the company (2014)
Growth capital supported the company’s international growth initiatives and
investment in new software product development.
Approximate value between NZD $25m - $50m
Financial acquirer Strategic acquirer
This example highlights Seequent’s growth journey over the last decade. Seequent is a leading global software provider of 3D geological modelling. The framework overlays the
type of acquirer and valuation multiple approach - Seequent’s business model has transitioned over the last decade, earning the right to be valued on a revenue multiple.
#281 Page 1 of 2
Mergers & acquisitions
Corporate finance advisory
Capital raising
27 March 2023
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Overview
WiseTech (ASX:WTC) is a global logistics software provider. Its hero platform, CargoWise, offers end-to-end supply chain management. The software solutions include freight
forwarding, customs compliance, warehousing, and transportation management. WiseTech has grown through geographical and product expansion and has completed 30
acquisitions since the start of FY18 (June year end). This Tech Insights report looks at WiseTech’s performance history and acquisition strategy.
WiseTech share price (AUD $) and announced deals
Acquisitions FY18 FY19 FY20 FY21 FY22 FY23 Total
Acquisition count 15 8 3 - - 4 30
Disclosed spend (AUD $m) 213 300 51 - - 957 1,521
Revenue by geographic segment (AUD $m)
-
200
400
600
FY18 FY19 FY20 FY21 FY22
Europe,
Middle East
and Africa
Asia Pacific
Americas
Revenue growth (AUD $m)
-
200
400
600
FY18 FY19 FY20 FY21 FY22
Organic
growth
Acquisition
growth
-
10
20
30
40
50
60
70
Jun 17 Jun 18 Jun 19 Jun 20 Jun 21 Jun 22
Acquisition announced
June year end
Earnout performance goals (at announcement)
FY Country Product Transaction
value (AUD $m) Integration Revenue /
financial
Customer
conversion
Product
dev
FY17 Brazil Customs solutions 13 ✓
FY17 Australia Tariff compliance 6 No earnout
FY17 Taiwan Customs / forwarding (not disclosed) ✓ ✓ ✓
FY17 Australia Road transport logistics 9 ✓
FY17 Netherlands Rates management 7 ✓
FY17 USA Rates management 12 ✓
FY17 Australia Warehouse management 40 ✓ ✓
FY17 Ireland Airline messaging 3 (not disclosed)
FY17 Ireland Customs solutions 17 (not disclosed)
FY17 Netherlands Customs solutions 8 ✓ ✓ ✓
FY17 Australia Customs / forwarding 25 ✓ ✓ ✓ ✓
FY17 Turkey Customs solutions 8 ✓ ✓ ✓ ✓
FY17 USA Road transport logistics 4 ✓ ✓
FY17 Canada Customs solutions 3 ✓ ✓
FY17 USA Parcel management 59 ✓ ✓
FY19 Spain Customs solutions 47 ✓ ✓
FY19 USA Road transport logistics 69 ✓ ✓
FY19 UK Customs / forwarding 5 ✓ ✓
FY19 Australia Parcel management 55 ✓ ✓ ✓
FY19 Sweden Customs solutions 4 ✓ ✓
FY19 Norway Customs solutions 6 ✓ ✓
FY19 Australia Container optimisation 92 No earnout
FY19 Sweden Messaging integration 23 ✓ ✓
FY20 USA Container management 8 ✓ ✓
FY20 South Korea Compliance solutions 20 ✓ ✓ ✓
FY20 Switzerland Customs solutions 23 ✓ ✓
FY23 UK Digital documentation (not disclosed) (not disclosed)
FY23 UK Data entry automation (not disclosed) (not disclosed)
FY23 USA Drayage transport 351 Escrow arrangement
FY23 USA Rail transport solutions 606 Escrow arrangement
1,521
Page 2 of 2
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actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
WiseTech acquisition strategy and deal structures
0% 20% 40% 60% 80% 100%
Blume
Envase
Shipamax
Bolero
SISA
Ready Korea
Depot Systems
Xware
Container Chain
SYSTEMA
CargoIT
IFS
LSI-Sigma
Trinium Technologies
Taric
Pierbridge
Fenix Data Systems
SaaS Transportation
Ulukom Bilgisayar
Forward, Softcargo, EasyLog
LSP Solutions
ABM Data Systems
Cargo Community Systems
Microlistics
Planet Traders
Cargoguide
CMS Transport Systems
Prolink
Digerati
Bysoft
Upfront component Earnout component
Historically, WiseTech’s acquisition strategy has included substantial earnout components (an average earnout of 40% of the total transaction value). In 2020, WiseTech refreshed
their acquisition strategy, renegotiating 17 of its previously agreed acquisition earnouts. The renegotiations included a substitution of equity compensation, rather than cash, and
a close-out of future earnouts, removing significant cash obligations and reducing future contingent liabilities.
(earnout proportion not disclosed)
(earnout proportion not disclosed)
(not disclosed)
(not disclosed)
(earnout proportion not disclosed)
#280 Publicis Groupe OmnicomGroup WPP IPG Dentsu
AUS/NZ acquisitions by major advertising agencies (NZ companies in green)
Page 1 of 2
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Overview
Major advertising agencies have a track record of regularly acquiring firms in New Zealand and Australia. The five major firms shown in this Tech Insights report each trade at
relatively similar valuation multiples, have similar profitability margins, and generate a similar % of their revenue from the Asia/Pacific region. For profitable private Australian and
New Zealand advertising, media, digital and design agencies, selling to one of these firms can be a strong exit scenario.
Total
11
9
18
3
15
56
Note: Includes acquisitions by subsidiaries
AKQA Bower House
Meerkats
Dominion
Switched on Media
Assignment Group
Lightspeed
Essence Global
Designworks
Webling
Rapid Media
Chemistry Media
NorthandSouth
Union Digital
Heyday
PLAY
DT Digital
Blackwood
Revolver Mnet Milkmoney
Enigma Aware
Davanti
Halo Sport
Amicus
Klip Desk
Little Giant
Accordant
With Collective
Search Factor
Scorch
Barnes, Catmur & Friends
Soap Creative
BWM Isobar
Oddfellows
Levo MAX
Perceptive
Redhanded Lifelounge
Bruce Clay
Touchcast Channel 5
Clemenger
Tquila
Citrus
Balance
Third Horizon
Affinity iD
Herd MSL MBM
MercerBell
FirstClick
2DataFish
Match Media
2010 2012 2014 2016 2018 2020 2022
Enterprise value and revenue - NZD $b
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actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Mergers & acquisitions
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Asia/Pacific revenue as a % of total
Enterprise value / EBITDA – since 2018 EBITDA margin (last four years)
Note: WPP had negative EBITDA in FY20
Note: no data for WPP
-
5
10
15
20
25
30
35
40
Publicis Omnicom WPP IPG Dentsu
NZD $b
-
5%
10%
15%
20%
Publicis Omnicom WPP IPG Dentsu
LTM
4 years
ago
Revenue
EV
-
2%
4%
6%
8%
10%
12%
14%
Publicis Omnicom IPG Dentsu
-
2x
4x
6x
8x
10x
12x
Jan 18 Jan 19 Jan 20 Jan 21 Jan 22 Jan 23
Publicis
Omnicom
WPP
IPG
Dentsu
#279 Company spotlight FNZ
Mergers & acquisitions
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13 Mar 2023
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Overview
FNZ is a global platform provider in the wealth management sector, providing solutions for wealth managers, asset managers, retail and private banks, and life insurers. FNZ
has grown rapidly in recent years, expanding its global presence through acquisitions and partnerships with major financial institutions such as local investment bank Jarden
and global passive fund manager Vanguard. This report takes a closer look into the USD $20 billion valued company whose origins began in New Zealand.
2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023
History
FNZ acquires Hatch
Invest from Kiwi
Wealth for NZD
$40m. Clare Capital
acts as adviser to the
seller.
General
Atlantic
acquires an
unknown
minority stake
in FNZ from
H.I.G. Capital.
CDPQ and Generation
Investment agree to
purchase H.I.G. Capital
and General Atlantic’s
share of FNZ in a deal
valuing the business at
GBP £1.65 billion (NZD
$3.35 billion).
FNZ announces
funding from new
investor Temasek
Holdings to
consolidate across
Europe and grow
in Asia.
FNZ is founded by
then equity analyst
Adrian Durham and
Jarden.
Jarden
establishes
business unit
specifically
for FNZ Wrap.
FNZ secures first
major deal with
UK Insurance
provider
Standard Life.
Company
headquarters
are moved to
Edinburgh.
Jarden divests from
FNZ. H.I.G. Capital
fund the acquisition
of FNZ in a
management buy
out for GBP £13
million (NZD $34
million) in cash.
FNZ moves
headquarters
back to NZ.
FNZ announces a
GBP £1.03 billion
(NZD $2.01 billion)
capital raise at a
post money
valuation of GBP
£14.7 billion (NZD
$28.7 billion).
30+
locations
6,000+
employees
8
investments
16
acquisitions
$1.5 trillion
client assets
(USD)
20 million
end clients
Selected customers
Company overview
FNZ’s suite of technology platforms span the
entire wealth management value chain,
including; investment administration,
fund/product services, platform solutions,
adviser tools, digital portals for retail
investors, and banking services.
The business predominantly generates its
revenue from asset servicing fees (basis
points charged on assets on the platform),
and implementation and enhancement fees
related to development and new
configurations for customers.
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over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
FNZ presence Acquisitions (USD $m)
Company Country Description Enterprise
value
Revenue Revenue
growth
Gross
margin
EBITDA EBITDA
margin
EV/
Revenue
EV/
EBITDA
SS&C Technologies USA Software provider 20,820 5,283 4.6% 47.8% 1,752 33.2% 3.9x 11.3x
SEI Investment Company USA Wealth management solutions 6,720 1,991 3.8% 79.2% 529 26.6% 3.4x 9.4x
AssetMark USA Wealth management software 2,171 618 16.6% 47.6% 179 28.9% 3.5x 11.7x
Envestnet USA Wealth management software 3,950 1,240 4.5% 25.1% 94 7.6% 3.2x 35.0x
Allfunds Group United Kingdom WealthTech platforms 3,500 2,669 34.5% 19.0% 303 11.4% 1.2x 10.2x
Netwealth Australia Wrap platform 2,129 173 19.3% 61.4% 83 47.8% 17x 36.1x
Comparables (USD $m)
Hatch Invest
Investment platform
NZD $40m
Target Type Date Amount Country
Ifsam (B2B) fund platform Feb 23 Sweden
Nucleus Financial WRAP platform Feb 23 862 United Kingdom
YieldX Fixed income platform Jan 23 USA
Authenteq AML/KYC Nov 22 Germany
Diamos AG Fund admin software Sep 22 Germany
New Access Banking solution Jul 22 Switzerland
GBST Capital Markets Trade processing Dec 21 Australia
Appway Onboarding solutions Dec 21 Switzerland
Fondsdepot Bank Trading platform Nov 21 325 Germany
Hatch Invest Investment platform Oct 21 28 New Zealand
Silica Holdings Admin platform Jul 20 29 South Africa
State Street Wealth Wealth management Jul 20 USA
Augsburger Aktienbank Securities business Jul 20 Germany
Irish Progressive Services Admin solutions Feb 20 Ireland
JHC Systems Wealth platform Jul 19 United Kingdom
Ebase Banking Jul 18 173 Germany
#278
Manually added:
#278 Ngāti Toa Rangatira and MoE Transaction
Westpac, ANZ, BNZ, Booster, Fisher Funds
Page 1 of 2
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6 March 2023
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Overview
Last year, Te Rūnanga o Toa Rangatira (Ngāti Toa Rangatira's mandated iwi authority) purchased the land of 40 school properties (144 hectares) in Te Whanganui-a-Tara
(Wellington), making it the largest landlord to the Ministry of Education (Te Tāhuhu o te Mātauranga) and securing ongoing rental income for the iwi. The arrangement, under a
wider 2014 Ngāti Toa Treaty settlement, is recognition of Crown breaches of Te Tiriti o Waitangi (The Treaty of Waitangi) which resulted in the iwi significantly stripped of
whenua, resources and mana.
Transaction details
Ngāti Toa purchased school land from MoE
for $352m (land value of $440m) and leases
land back to MoE (initial lease of 21 years with
ongoing terms of renewal)
A funding syndicate has lent Ngāti Toa
money for the purchase and Ngāti Toa will
make ongoing interest and principal
payments on the loan.
Debt
Cash
-
250
500
Land value Discount Purchase price
NZ $m
$440m $88m
$352m
Balance Sheet – year end June
Debt - funding syndicate
A funding syndicate was formed with 7 parties. The majority of the purchase was funded through source lending
partners, rather than using iwi cash assets.
NZD $m 2021 2022
Cash and cash equivalents 46 27
Inventories 15 82
Other 64 47
Current Assets 126 157
PPE 34 41
Investment property 93 551
Other 42 63
Non-Current Assets 168 654
Total Assets 294 811
Current Liabilities 18 29
Loans and borrowings - 333
Deferred tax liability - 6
Non-Current Liabilities - 339
Total Liabilities 18 368
Net Assets 276 443
Te Rūnanga o Toa Rangatira Incorporated Group
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over the actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Schools included in the transaction
Porirua
Adventure School
Aotea College
Brandon Intermediate/Porirua College
Cannons Creek School
Corinna School
Discovery School
Glenview School
Mana College
Maraeroa School
Papakōwhai School
Paremata School
Plimmerton School
Porirua Activity Centre
Porirua East School
Porirua School
Postgate School
Pukerua Bay School
Rangikura School
Russell School
Te Kura Māori o Porirua
Titahi Bay Intermediate
Titahi Bay North School
Titahi Bay School
Windley School
Tawa
Greenacres School
Hampton Hill School
Linden School
Redwood School
Tawa College & Tawa Intermediate
Tawa School
Other
Bellevue School
Churton Park School
Evans Bay Intermediate
Johnsonville School
Karori Normal School
Khandallah School
Ngaio School
Pāuatahanui School
Paparangi School
Rewa Rewa School
Estimated payment profile and debt balance
The estimated profiles below are based on information provided in Te Rūnanga o Toa Rangatira’s
annual report and high-level assumptions.
Financial statement notes within the annual report implies annual rent to be received from MoE is
approximately $20m. This illustration assumes net cash inflows will not be received until 2047 (ie
annual interest and principal repayments are exactly offset by rental income).
(40)
(30)
(20)
(10)
-
10
20
30
40
2022 2027 2032 2037 2042 2047 2052
NZ $m
Estimated future income and expense profile
Rental income
Principal repayments
Interest payments
Net cash inflows
Key assumptions
Interest rate 6.1%
Loan period 25 yrs
Rent growth rate 2%
-
100
200
300
400
2022 2027 2032 2037 2042 2047 2052
NZ $m
Estimated loan balance
Mergers & acquisitions
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#277
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27 Feb 2023
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Overview
This Tech Insights report looks at tech companies listed on the ASX. The report provides a share price comparison for a group of the largest ASX tech companies, a breakdown
of the industry based on size, and comparator data for some of the larger players. We use the S&P Capital IQ ‘Information Technology’ definition to identify what is a tech
company (this includes software & hardware companies) and only look at companies with a primary listing on the ASX.
Share price indices for major ASX tech companies
-
20
40
60
80
100
120
WiseTech
Computershare
REA
Technology One
Xero
Seek
carsales.com
NEXTDC
Altium
ASX tech companies – Enterprise Value AU$b
180 other tech
companies
-
50%
100%
150%
200%
Jan-21 Apr-21 Jul-21 Oct-21 Jan-22 Apr-22 Jul-22 Oct-22 Jan-23
WiseTech
Computershare
REA
Xero
Seek
carsales.com
ASX 200
ASX 200 Info. Tech.
Index
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actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Revenue
Revenue
growth
Margin (LTM)
Revenue
multiple
Name Description EV LTM NTM LTM NTM EBITDA
40%
rule
LTM NTM
WiseTech Software platform for logistics service providers. 20,135 729 929 33% 27% 43% 76% 28x 22x
Computershare Stock registration and transfer services. 17,153 4,201 4,771 34% 14% 26% 60% 4x 4x
REA Online property advertising. 16,803 1,432 1,278 13% -11% 39% 52% 12x 13x
Xero Accounting software. 11,759 1,154 1,419 30% 23% 8% 38% 10x 8x
SEEK Online employment marketplace. 9,921 1,226 1,255 29% 2% 32% 61% 8x 8x
carsales.com Online automotive, motorcycle and marine classifieds. 9,114 599 811 27% 35% 46% 74% 15x 11x
NEXTDC Data centre outsourcing solutions. 5,276 291 348 18% 20% 53% 71% 18x 15x
Altium Computer software for the design of electronic products. 4,693 343 407 27% 19% 35% 62% 14x 12x
Technology One Enterprise resource planning. 4,625 368 418 18% 13% 32% 50% 13x 11x
Domain Digital property portal. 2,157 368 391 12% 6% 17% 30% 6x 6x
PSC Insurance Diversified insurance services. 1,888 268 293 17% 9% 37% 53% 7x 6x
Dicker Data Distribution of computer hardware and software. 1,774 2,874 3,319 39% 15% 4% 44% 1x 1x
Link Record keeping technology. 1,489 1,174 1,225 1% 4% 13% 15% 1x 1x
Objective Enterprise content management. 1,130 109 120 8% 10% 23% 31% 10x 9x
Data#3 Cloud solutions data center solutions. 1,104 2,358 2,694 12% 14% 2% 15% 0x 0x
Codan Communications, metal detection and mining technology. 1,084 461 467 -8% 1% 26% 18% 2x 2x
SiteMinder Platform for accommodation providers. 1,019 133 170 26% 27% -41% -15% 8x 6x
Silex Systems Laser uranium enrichment technology. 1,014 8 2 47% -76% -31% 16% 119x 507x
Life360 Location-based services. 983 270 401 121% 49% -46% 75% 4x 2x
Mean 5,954 967 1,090 27% 11% 17% 43% 15x 34x
Median 2,157 461 467 26% 14% 26% 50% 8x 8x
Comparator metrics for major ASX tech companies – AU$m
#276
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Overview
This Tech Insights report looks at the level of ownership held by Australasian Venture Capital and Private Equity funds in New Zealand companies. Typically, early stage and
growth investors, including Venture Capital funds, have an average shareholding of 10% to 20%, with later stage Private Equity funds having an ownership of 30% to 85%. Note this
analysis only includes New Zealand investments and does not factor in other investment instruments (e.g. convertible notes). Only investments both listed on the fund’s website
and visible on the New Zealand Companies Register were included in the analysis.
Venture Capital investor ownership
Punakaiki Fund Movac Pacific Channel Hillfarrance Nuance Capital Climate VC Punakaiki Fund Total VC
Investment count 19 20 16 26 15 6 3 105
Investment size $0.5m - $3m $0.5m - $15m $0.5m - $10m $0.1m - $3m $1m - $6m $0.5m - $10m $0.1m - $1m
25th percentile 13% 10% 5% 6% 3% 5% 3% 6%
Median holding 18% 17% 13% 13% 10% 6% 3% 13%
75th percentile 27% 26% 19% 27% 14% 7% 7% 18%
-
20%
40%
60%
80%
100%
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actual numbers. Clare Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Private Equity investor ownership
Waterman Pioneer Capital Oriens Capital Pencarrow Rangatira Direct Capital Milford Total PE
Investment count 6 13 7 9 14 5 6 60
Investment size $10m – $40m $10m – $50m $5m – $15m $20m – $50m $10m – $50m $20m – $80m $10m – $20m
25th percentile 44% 59% 24% 37% 25% 28% 21% 27%
Median holding 88% 75% 62% 52% 44% 31% 25% 52%
75th percentile 100% 96% 80% 65% 93% 37% 43% 85%
-
20%
40%
60%
80%
100%
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