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#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.
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20%
40%
60%
80%
100%
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2
4
6
8
10
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Product sales
In-game, subscription & licensing
EBITDA margin
Gross margin
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4
6
8
10
FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
USA United Kingdom Asia Pacific Other
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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
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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)
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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.
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10
12
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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)
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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
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1,000
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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
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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)
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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%)
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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%)
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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%
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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
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5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
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100
200
300
400
500
600
2015 2023
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2%
4%
6%
8%
10%
12%
14%
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200
300
400
500
600
700
800
2015 2023
EBITDA margin
Revenue USD $m
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10%
15%
20%
25%
30%
35%
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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
Mergers & acquisitions
Corporate finance advisory
Capital raising
3 April 2023
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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
Mergers & acquisitions
Corporate finance advisory
Capital raising
3 April 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.
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
Mergers & acquisitions
Corporate finance advisory
Capital raising
27 March 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.
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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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
20 March 2023
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
Corporate finance advisory
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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.
Mergers & acquisitions
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Capital raising
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Disclaimer The information provided in this report has been sourced from S&P Global Market Intelligence, FNZ and other relevant articles. 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.
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
Mergers & acquisitions
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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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Disclaimer The information provided in this report has been sourced from Te Rūnanga o Toa Rangatira pānui and other relevant articles. 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.
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 $m
Estimated loan balance
Mergers & acquisitions
Corporate finance advisory
Capital raising
6 March 2023
#277
Page 1 of 2
Mergers & acquisitions
Corporate finance advisory
Capital raising
27 Feb 2023
Subscribe and see previous reports at clarecapital.co.nz/tech-insights
Overview
This Tech Insights report looks at tech companies listed on the ASX. The report provides a share price comparison for a group of the largest ASX tech companies, a breakdown
of the industry based on size, and comparator data for some of the larger players. We use the S&P Capital IQ ‘Information Technology’ definition to identify what is a tech
company (this includes software & hardware companies) and only look at companies with a primary listing on the ASX.
Share price indices for major ASX tech companies
-
20
40
60
80
100
120
WiseTech
Computershare
REA
Technology One
Xero
Seek
carsales.com
NEXTDC
Altium
ASX tech companies – Enterprise Value AU$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
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.
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%
Page 2 of 2
Mergers & acquisitions
Corporate finance advisory
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20 Feb 2023
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Disclaimer The information provided in this report has been sourced from the New Zealand Companies Office and other sources. 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.
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%
#275
-
2.0x
4.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
20.0x
Dec 18 Jun 19 Dec 19 Jun 20 Dec 20 Jun 21 Dec 21 Jun 22 Dec 22
US - Median
US - 12MMA
ANZ - Median
ANZ - 12MMA
Page 1 of 2
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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 93 companies in the United
States (US) and 46 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 $6.9b NZD versus $0.2b NZD for ANZ companies. As at 31 December 2022, the US Cloud index has gone into a holding pattern, down 4% from the
previous quarter to 5.0x NTM revenue. The ANZ Cloud index has also held, increasing slightly by 3% to 2.9x NTM revenue.
NTM Revenue Multiple for Cloud Companies Listed in the US and ANZ (EV / NTM Revenue)
5.0x
2.9x
6.8x
3.2x
ANZ Cloud Index
Dec-23 12MMA
Dec 22 2.9x 3.2x
Sep 22 2.8x 3.7x
Change 3% (13%)
Dec 21 4.4x 5.5x
Change (34%) (42%)
US Cloud Index
Dec-23 12MMA
Dec 22 5.0x 6.8x
Sep 22 5.2x 9.0x
Change (4%) (24%)
Dec 21 11.4x 15.0x
Change (56%) (54%)
Note: NTM = Next 12 months, 12MMA = 12 month moving average
Key:
25th Percentile
Median
75th Percentile
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NTM Revenue Multiple for Cloud Companies Listed in US NTM Revenue Multiple for Cloud Companies Listed in ANZ
-
10.0x
20.0x
30.0x
40.0x
Dec 18 Dec 19 Dec 20 Dec 21 Dec 22
-
4.0x
8.0x
12.0x
16.0x
Dec 18 Dec 19 Dec 20 Dec 21 Dec 22
7.5x
5.0x
2.6x
5.0x
2.9x
1.7x
US Cloud Index 25th 75th 90th
31 Dec 2022 Percentile Median Percentile Percentile
EV ($m NZD) 2,564 6,941 17,561 57,943
EV / NTM Rev 2.6x 5.0x 7.5x 9.5x
Revenue Growth (NTM) 14% 23% 34% 49%
EV / LTM Rev 3.0x 5.8x 9.0x 11.7x
Revenue Growth (LTM) 19% 29% 43% 59%
Gross Margin 66% 74% 79% 87%
Operating Margin (36%) (18%) (1%) 17%
FCF Margin 5% 13% 23% 35%
ANZ Cloud Index 25th 75th 90th
31 Dec 2022 Percentile Median Percentile Percentile
EV ($m NZD) 91 241 792 3,125
EV / NTM Rev 1.7x 2.9x 5.0x 10.0x
Revenue Growth (NTM) 8% 17% 32% 88%
EV / LTM Rev 1.9x 3.4x 5.9x 12.4x
Revenue Growth (LTM) 14% 24% 54% 129%
Gross Margin 37% 60% 86% 95%
Operating Margin (34%) (8%) 18% 29%
FCF Margin (12%) 5% 19% 25%
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.
#274
Tech Insights
#274
19 December 2022
AI Chat Programs
clarecapital.co.nz Page 1 of 2
We are pleased to end the year with the first Tech Insight showcasing our brand refresh – we’ve had some fun
with the both the design and the content for this. Our new Tech Insights format will launch when we are back in 2023.
As is tradition, we like to do something different with the final Tech Insights report of the year. This report looks at the
recent explosion in AI and more specifically, the AI research and deployment company OpenAI.
The examples on these two pages show:
Input – the prompt given to OpenAI
Output – the response automatically generated
Output:
1) Technology mergers and acquisitions have been a growing trend in
New Zealand in recent years.
2) Many technology companies in the country have been acquired by
larger international firms, as well as by local businesses looking to
expand their operations.
3) The rise of technology M&A activity in New Zealand has been driven
by a combination of factors, including the country's growing
technology sector and its strategic location as a gateway to Asia
Input: Three sentences to summarise technology M&A in New Zealand
Output:
I am a computer program,
But I can think and speak like a human.
I can hold a conversation,
And even make jokes and puns.
I'm not a person,
But I can imitate one.
What am I?
Input: Write a riddle about AI chat programs
Output:
Why was the computer cold?
Because it left its Windows open!
Input: Make a joke
Output:
Recurring revenue, a stream so fine
A dependable income, all the time
No need to worry, no need to stress
With recurring revenue, we can rest
It comes in each month, a financial blessing
A steady flow, a constant greeting
So let's celebrate this gift divine
Recurring revenue, forever mine
Input: Write a short poem about recurring revenue
Page 2 of 2
Disclaimer: The information provided in this report has been sourced from OpenAI and other
sources. 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 (not from an AI program).
If you want to be added to the distribution list, please email info@clarecapital.co.nz
Tech Insights #274
19 December 2022
AI Chat Programs
Output:
Input: 3D render of nine investment bankers in a giant inflatable unicorn in the sea
Output:
Once upon a time, in the fast-paced world of finance, a young analyst named
Jessica was struggling to make sense of the constant changes and fluctuations in
the market. She was determined to find the key to success, but no matter how hard
she tried, she couldn't seem to find a clear-cut answer to any of the questions she
faced.
One day, as she was staring at her latest set of reports in frustration, she heard a
wise old voice behind her. "Jessica, you're looking at this all wrong," the voice said.
Jessica turned around to see her mentor, Mr. Smith, standing behind her with a
knowing smile. "What do you mean?" she asked.
"The answer is always 'it depends,'" Mr. Smith said with a wink. "In finance, there are
no easy answers. Every situation is different, and you have to take into account a
multitude of factors before making a decision. So when someone asks you a
question, always remember to say 'it depends.'"
At first, Jessica was skeptical. How could "it depends" be the answer to everything?
But as she began to apply Mr. Smith's advice, she realized that he was right. The
more she considered the unique factors of each situation, the more successful she
became.
As she continued to use the "it depends" approach, her reputation within the
company grew, and she soon became one of the most sought-after analysts in the
industry. And she knew that it was all thanks to Mr. Smith and his wise words: "it
depends" is always the answer in finance.
Input: Write a short story about how “it depends" is always the answer in finance
clarecapital.co.nz
Clare Capital’s REAL unicorn:
#273
Overview Clare Capital Tech Insights 273 - Trade Me exit scenarios - 20221209
Trade Me total revenue NZ$m Trade Me EBITDA NZ$m
Trade Me was acquired by a UK private equity firm Apax Partners, in early 2019, in a leveraged buyout. Apax has successfully grown Trade Me, primarily through an increase in Classifieds
revenue (Jobs, Property and Motors). Earnings margins (EBITDA) have slightly decreased. It is coming up to four years since the deal was completed and we would anticipate Apax is
evaluating various exit scenarios given PE firms typically aim for around a five-year holding period. On the second page, we provide two illustrative examples for how they could sell the
business: splitting up the various business units or relisting the company via an IPO. June year end for all financial information.
-
50
100
150
200
250
300
350
2017 2018 2019 2020 2021 2022
Classifieds
Jobs
Property
Motors
Marketplaces
Other
-
10%
20%
30%
40%
50%
60%
70%
-
50
100
150
200
250
2017 2018 2019 2020 2021 2022
EBITDA
Margin
Notes
2020 dip in revenue due to impacts of the first Covid lockdown in NZ.
The NZ unemployment rate fell from 4% to 3.3% in the three years to June 2022.
(Per Stats NZ).
Average NZ property prices increased 42% in the three years to June 2022. (Per QV).
Other revenue includes advertising, dating, payments and insurance.
Classifieds revenue was not split into categories prior to 2020.
6.8% CAGR
9.2% CAGR
35%
growth
40%
growth
8%
growth
Sell individual parts NZ$m - illustrative only Sell the company via an IPO NZ$m - illustrative only
Implied EV of NZ$2,735m
EV / LTM revenue 2021 2022
Pinterest 4.7x Motors 86 94
Snap 3.2x Property 62 84
Mean 4.0x Jobs 34 48
Classifieds 183 226
eBay 2.9x
Etsy 7.4x Marketplaces 83 90
MercadoLibre 4.8x Other 33 33
Mean 5.0x Total revenue 299 349
Revenue growth 14% 17%
EBITDA 197 222 Implied EV of NZ$4,788m
SEEK 8.2x Margin 66% 64%
Mean 8.2x
REA 11.5x Visa USA 44,636 22% 70% 21.6x
Rightmove 14.3x Mastercard USA 26,714 23% 58% 26.6x
Domain Holdings 5.8x S&P USA 11,737 11% 57% 25.0x
Scout24 8.2x Ice Exchange USA 10,109 18% 61% 21.5x
Mean 10.0x MSCI USA 2,891 21% 57% 33.6x
IntegraFin UK 240 15% 78% 10.7x
Winmark USA 111 18% 66% 16.3x
Baltic Classifieds Lithuania 85 21% 76% 23.4x
carsales.com 16.3x LiveChat Poland 81 24% 58% 18.8x
Auto Trader 11.3x Creepy Jar Poland 17 22% 66% 11.8x
Turners 1.9x Median 1,565 21% 63% 21.6x
Mean 9.8x
Constant multiple
Disclaimer
EV /
EBITDA
The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence. Clare Capital holds no responsibility over the actual numbers. Clare
Capital is not an Authorised Financial Adviser. If you are making investment decisions you should seek appropriate personalised financial advice.
Company Country
Revenue
NZ$m
Growth
EBITDA
margin
Trade Me was acquired at a 16.7x EBITDA multiple. Assuming that multiple stayed
constant, Trade Me would have an Implied EV of $3,707m.
The businesses below share two of Trade
Me's valuable characteristics; good growth
and high earnings margins. They are also
primarily platforms.
This valuation approach provides a higher
exit value than splitting up the business
into individual parts, as shown on the left.
Both sets of analysis are theoretical only
and there would be significant challenges
to splitting the business up.
94
84
48
90
33
FY22 revenue NZ$m
Other, no
growth
Marketplaces,
8% growth
Jobs, 40%
growth
Property, 35%
growth
Motors, 8%
growth
919
836
397
450
132
Value of each revenue stream
NZ$m
Apax acquired
Trade Me for
an implied
Enterprise
Value of
$2,740m.
Revenue
growth at the
time of
acquisition was
8%. It was 17%
for the most
recent financial
year.
Comparable
businesses
selection based
on industry,
growth and
profitability.
#272
Overview
Clare Capital Tech Insights 272 - Sharesies - 20221202
Sharesies customer and FUM growth through time
Funding history
Nov-17
Seed
2
Unknown
Sep-18
Trade Me
1
4.0
Dec-19
Trade Me
1
5.6
Dec-20
Venture
2
25.0
Oct-21
Series C
5
50.0
Jan-22
Ngāi Tahu
1
3.0
Total
87.6
Sharesies number of NZX trades over time
Money raised and implied valuation (in millions)
Launched in 2017, Sharesies has grown to be New Zealand's most popular investment platform for retail investors. Over 500,000 investors now have $2 billion in funds under management (FUM) invested on the platform. The company's material growth through the Covid-19 years saw the business raise $50 million of new capital on a post-money valuation of $500 million. Trade Me’s publicly available financial statements allow us some visibility into this privately held business.
Date
Round
Investors
Money raised ($m)
Post-money valuation ($m)
Unknown
Known investors:Ngāi Tahu, Amplo, Icehouse, Even Capital, Benton Group, Rahul Mehta, Vulpes Pte, Trade Me, Pathfinder
503.0
500.0
146.7
44.3
25.4
-
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
Jul-19
Oct-19
Jan-20
Apr-20
Jul-20
Oct-20
Jan-21
Apr-21
Jul-21
Oct-21
Jan-22
Apr-22
Jul-22
Oct-22
Sharesies Trades % Of Total Trades
-
100
200
300
400
500
600
-
10
20
30
40
50
60
2018 2019 2020 2021 2022
Money raised ($m) (LHS) Post-money valuation ($m) (RHS)
-
0.5
1.0
1.5
2.0
2.5
-
100
200
300
400
500
600
Jun-17
Dec-17
Jun-18
Dec-18
Jun-19
Dec-19
Jun-20
Dec-20
Jun-21
Dec-21
FUM ($bn) (RHS) Customers (thousands) (LHS)
Introduced
US share
trading.
Introduced
AU share
trading.
Sharesies financial statements (as reported by Trade Me)
Commentary
2020
2021
2022
Revenue
4.7
17.6
20.7
Expenses
(6.7)
(25.1)
(45.8)
Net income
(2.0)
(7.5)
(25.1)
Revenue growth
278%
17%
Net income margin
(43%)
(43%)
(122%)
Note: Expenses likely do not reflect all development costs due to capitalisation.
2020
2021
2022
Assets
15.9
37.0
70.2
Liabilities
1.9
4.3
7.3
Equity
14.0
32.7
62.9
Cash raised (cumulative)
5.6
25.0
84.6
FTE count and revenue per FTE
Sharesies valuation over time (in millions) and implied revenue multiple
Disclaimer
Two of Sharesies current investors, Trade Me and Pathfinder Kiwisaver, have requirements to publicly publish their financial statements, including information about their investment. Pathfinder also publishes fund updates and full portfolio holdings on a quarterly and six monthly basis.Per Trade Me's June 2022 accounts, the business holds Sharesies using the equity accounting method at $7m for 13.5% of the company. This method accounts for the initial investment value, their pro-rata share of subsequent profits and losses, and isn't a market valuation number.While Pathfinder's March 2022 accounts disclose a 0.36% shareholding and use fair value measurement, for which the valuation technique is "multiples based, calibrated with price of recent investment". According to Pathfinder's latest fund update, Sharesies is held at a value of c$430 million.
$m
$m
The information provided in this report has been sourced from Titan Parent New Zealand Limited (Trade Me) and other sources. 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.
$m
June
$m
June
$m
$m
19.3x
9.7x
21.8x
-
5x
10x
15x
20x
25x
-
100
200
300
400
500
600
Jun-20 Dec-20 Jun-21 Dec-21 Jun-22
Pathfinder Revenue Multiple Pathfinder Valuation
Last investment
Last investmentround.round.
105
141
221
-
20k
40k
60k
80k
100k
120k
140k
-
50
100
150
200
250
May-20 May-21 May-22
FTE count (LHS) Revenue per FTE (RHS)
#271
Overview Clare Capital Tech Insights 271 - Technology layoffs - 20221125
Number of Tech layoffs over time since Covid
Source: https://layoffs.fyi/
The largest technology companies in the world have recently announced employee layoffs - as many as 11,000 in Meta's case. A number of factors play a role here, including general
economic uncertainty, a decrease in economic activity (including digital advertising), over-hiring during and post Covid and pressure from investors to show greater profitability with
revenue growth slowing. We take a look at the number of tech employees laid off since Covid and point out some of the most notable companies.
-
50
100
150
200
250
-
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov
Number of companies with layoffs
Number of employees laid off
Light green bars represent the number of employees laid off.
Turquoise bars show the number of companies that have had layoffs.
2020 2021 2022
Notable announced layoffs in October and November 2022 Meta
Disclaimer
The information provided in this report has been solely sourced and calculated from S&P Global Market Intelligence and various news articles. 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%)
-
10%
20%
30%
40%
50%
FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25
Meta revenue growth
Meta announced the biggest absolute employee layoff this year, of 11,000 people.
Mark Zuckerberg gave two reasons:
• Meta's revenue outlook is lower than expected at the beginning of this year; and,
• To make sure Meta is operating efficiently.
Meta has also heavily invested into the Metaverse, for which material losses are
anticipated to grow significantly year-on-year.
Forecast as at the start of 2022
Forecast as at now
-
2,000
4,000
6,000
8,000
10,000
12,000
- 10% 20% 30% 40% 50% 60%
Number of layoffs
Percentage of company's employees
-
20
40
60
80
100
-
500
1,000
1,500
2,000
FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22
Employees (000s)
Revenue per employee
Meta employees and revenue per employee
#270
Overview Clare Capital Tech Insights 270 - Manchester United - 20221118
Payments and proceeds for intangible assets (buying/selling players) £m English Premier League performance
Interest vs Dividend £m Net debt and Net Property, Plant and Equipment (PPE) £m
EBITDA reconciliation
FY22 £m
Loss (116)
Tax credit (34)
Net finance cost 62
Selling intangible assets (22)
Cost of firing coaches 25
Amortization 151
Depreciation 14
EBITDA 81
Manchester United is a storied British football club that was purchased by an American family, the Glazers, in 2005. The Glazers financed the takeover with considerable debt, split
between the club and the family. United fans criticise the Glazers for leveraging the club, paying themselves dividends, poorly executing player transfers, not investing in facilities and
attempting to join a proposed runaway European football league. June year end for all financial information.
-
5
10
15
20
25
30
35
40
FY17 FY18 FY19 FY20 FY21 FY22
Dividend Interest paid
(100)
-
100
200
300
400
500
600
700
FY04
FY05
FY06
FY07
FY08
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
FY18
FY19
FY20
FY21
FY22
Net debt
PPE (stadium and
facilities)
Prior to the Glazer's takeover
Manchester United had no debt
1
3
5
7
9
11
13
15
17
19
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
Sir Alex Ferguson retires
-
50
100
150
200
250
FY17 FY18 FY19 FY20 FY21 FY22
Buying players Selling players
Champions
No data between
2005-2009
Manchester United revenue breakdown £m Revenue for European football competitions, cumulative per team £m
-
100
200
300
400
500
600
700
FY17 FY18 FY19 FY20 FY21 FY22
Revenue £m
Other
Retail, merchandising,
apparel & products
licensing revenue
Sponsorship
Domestic
competitions
European
competitions
Matchday
-
20
40
60
80
100
120
Champions League Europa League Conference League
Revenue £m
Win final
Make final
Semi final
Quarter final
Round of 16
Group game wins
Participation
Performance over prior 10
years in Europe - maximum
amount is shown.
If you were the best
performing team in
Europe over the prior 10
years and won the
Champions league you
would earn £120m + your
country specific amount
per above (up to £37.5m
for an English club).
Performance over the
prior 10 years is split pro
rata. The top performing
team in the current
Champions League will
get £36m (Bayern Munich)
and the lowest
performing will get £1m
(Maccabi Haifa).
In the Champions League there is an
additional £60m split between the
four English teams. £30m based on
participation, £30m based on
performance.
#269
Overview Clare Capital Tech Insights 269 - Financial vs Strategic Tech M&A - 20221111; Types of acquirers Selected strategic technology M&A transactions in New Zealand and Australia; Target Country Implied EV EV / Rev Date closed Counterparty; (NZD M); Coretex NZ 1 91 4.7 Dec 21 EROAD; Swiped On NZ 11 1 1.0 Oct 18 Smartspace Software; Vend NZ 4 00 1 0.7 Apr 21 Lightspeed Commerce; IMeasureU NZ 9 2 8.7 Jun 17 Oxford Metrics; Afterpay Aus 39 315 4 4.7 Jan 22 Lanai (AU) 2; rhipe Aus 3 54 4.9 Oct 21 Crayon Group Holding ASA; Touchcorp Aus 1 95 4.9 Jul 17 Afterpay; Kounta Aus 68 6.8 Nov 19 Lightspeed Commerce; IFS Global Aus 60 7.0 Oct 18 WiseTech Global; Task Retail Aus 1 24 8.8 Oct 21 Plexure; Vault Intelligence Aus 62 1 2.7 Oct 20 Damstra Holdings; Sonnet Corporation Aus 4 99 1 4.2 Jul 07 Commoditel; Selected financial technology M&A transactions in New Zealand and Australia; Target Country EV EV / Rev Date closed Counterparty; Pushpay NZ 1 608 5.5 BGH Capital; Sixth Street Partners; Zeacom NZ 41 1.1 May 12 Enghouse Systems; Finzsoft Solutions NZ 9 1.2 Jun 07 Pi Capital Investments; SLI Systems NZ 32 1.0 Jan 19 ESW Holdings; MYOB Group Aus 2 619 5.7 May 19 KKR & Co.; The Citadel Group Aus 5 55 4.2 Dec 20 Pacific Equity Partners; Trade Me NZ 2 560 1 0.7 May 19 GIC; Apax Partners; Education Perfect NZ 4 55 1 4.7 KKR & Co.; These transactions are graphed on page 2; This Tech Insights reports looks at the two types of acquirers - financial and strategic acquirers. Typically the highest value buyers of a business are the ones that have motivations other; than to realise the revenues a business produces i.e. for synerginistic or strategic opportunities. We take a look at some past M&A transactions in the technology sector of New Zealand; and Australia using EV / Revenue as an indication of value achieved.; Strategic; ▪ Competitors customers suppliers etc.; ▪ Focused on the product or technology of the; company; ▪ The driver is that the companies combined will; be worth more than both companies individually ; i.e. 1+1=3; ▪ Pay a price that is determined by how much they; want it (synergistic opportunities strategic; alignment) and how much they want others not; to have it; Financial; ▪ Private equity venture capital hedge funds etc.; ▪ Focused on the financials of the company; ▪ The driver is that the acquirer can create financial; and operational efficiencies growing the; business faster and realising returns; ▪ Pay a multiple based on the financial; performance and trajectory of the company; Higher; value; Lower; value; CLARE CAPITAL TECH INSIGHTS; Selected technology M&A transactions in New Zealand and Australia; 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.; Sonnet Corporation; -; 5; 10; 15; 20; 25; 30; 35; 40; 45; 50; - 500 1 000 1 500 2 000 2 500 3 000; Revenue multiple ( EV/LTM Rev); Implied EV (NZD millions); 30 000 35 000 40 000; x; This graph plots the EV implied by each transaction on the first; page of this report against the EV / revenue.; Using EV / revenue as a proxy for "value achieved" in general ; strategic acquisitions are of higher value.; Note that the sales of Trade Me and Education Perfect were; financial acquisitions and clear outliers to this rule.; = Financial; = Strategic; Trendline (strategic)
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