Published on the 13/04/2016 | Written by Beverley Head
The successful float of Sydney based logistics software company, WiseTech Global, this week signals continued investor appetite for local tech stocks…
WiseTech, which was founded in 1994, supplies logistics solutions to customers in 115 countries. In the six months to the end of December the company generated $48.5 million revenues, and $3.1 million in net profit.
It was enough to turn the company into what is commonly termed a “unicorn” – a tech business valued at over $1 billion – when it listed on the ASX this week. With an issue price of $3.35, it had intentions to raise $167 million worth of capital through the issue and transfer of 50.8 million shares.
By close of trade on the first day the shares were trading at $3.89, valuing the company at over $1.1 billion.
The company floated in order to be able to accelerate its international expansion plans, and also give it a measure of financial gravitas that it felt was required when negotiating with large global listed clients.
Founder and CEO Richard White remains the largest – and majority – shareholder in the business following the float. While the float has made him a very rich man, he has committed to stay with the business for the foreseeable future.
He also has engineered a somewhat different “credo” to many software companies which often deliver a minimal viable product in order to achieve innovation targets, with that entry level system then continually reviewed and refined. Writing in the prospectus White reveals a quite different approach.
“This business has grown and improved over many years. Major innovations and break through products don’t happen by accident — they can take years to develop and commercialise. We have a long track record of innovating continuously and successfully (with over 600 product releases last year alone). Today we have a significant pipeline of innovations at various stages of ideation, development or commercialisation. The words “Slower today, faster forever” are spoken amongst our teams frequently: to remind people that it is critical to do it right and that a rushed product that is buggy and incomplete is not an innovation, no matter how smart the idea is.”
While the concept may appear old fashioned, for enterprises – and there are 6,000 of them worldwide – running their logistics operations using WiseTech’s software, CargoWise, this commitment to quality must be reassuring.
On Monday when the newly listed stock faces all the same trading conditions as every other listed entity (it is this week being traded on a conditional basis) it will see whether investors are similarly reassured.
