Australian multinational corporation MYOB returns strong in the share market after a six-year absence.
The Australian-based accounting software provider Mind Your Own Business (MYOB) was readmitted to the list of the Australian Stock Exchange (ASX) at noon AEST of 4 May 2015, with 228 million shares, or about 40 per cent of company equity, sold as part of the float.
The shares of MYOB Group Limited (ASX: MYO) jumped 7.4 per cent above the A$3.65 investors paid during the company’s initial public offering (IPO) towards the higher end of its targeted price range of A$3-$4 a share. It then rose to A$3.92, and closes at A$3.89. Based on the share price, MYOB is now worth A$2.5 billion.
This meant MYOB’s chief executive Tim Reed, who owns 6.4 million shares or 1.1 per cent of the company, was worth an extra A$1.54 million, with MYOB’s share price closing 6.6 per cent above the IPO level.
Biggest Float of 2015
The biggest float since health insurer Medibank, which listed at A$2.15 in November 2014 with a market value of A$5.9 billion, MYOB sold 228 million new shares giving it a market capitalisation of A$2.13 billion. Medibank Private, which had a A$5.7 billion offer in November, was privatised in late 2014.
MYOB said it had received interest from investors globally and its main shareholder, Bain Capital, would retain about 58 per cent of the company, after its previous 95 per cent stake was diluted by the new shares. As most of the proceeds will be used to pay off debt, MYOB had hoped to raise A$833 million, but the share price jump means the float has raised A$888 million.
“In the past six years as a private company, we’ve transformed MYOB into a wonderfully innovative business that continues to focus on the needs and challenges of SMEs,” Reed said.
With the success of the biggest float of the year, Reed rejected criticisms by local fund managers that most of the interest in the stock was from offshore. Instead, he insists of celebrating this milestone.
“Today is a great celebration for small businesses around Australia and New Zealand. It is their success that has [helped us],” Reed said. He added, “We’re delighted with the institutional response, with strong support both onshore and offshore.”
Meanwhile, market analyst Ben Le Brun of Chicago-based investment service company OptionsXpress said MYOB’s successful float had helped sustain the broader market. “It’s been a successful IPO. It’s been the biggest one for the year and that certainly added to sentiment today,” he said.
“There was a lot of commentary that it was looking fairly valued but it’s had a strong debut and it certainly won’t do the prospects of future IPOs any harm.”
Acquisition by Bain’s Capital
Founded in 1991, MYOB provides accounting and business management software for customers in Australia and New Zealand. Through the years, it has transformed from a desktop to a cloud-based software company under the ownership of several owners, including another private equity firm Archer Capital which took over in January 2009. It was then sold to Bain Capital for about A$1.2billion in 2011.
MYOB bagged the Telstra Australian Business of the Year Award in 1996 and was listed on the annual BRW Most Innovative Companies list in 2013. Now, the company is still majorly owned by US private equity company Bain Capital and is, alongside management, a shareholder in the company. It continues to be a leading provider of accounting solutions in Australia and New Zealand.
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