Local retail investors won't get a chance to buy into the NZX float of website software developer SLI Systems after the share offer was overbid by almost two-and-a-half times in the bookbuild by institutions.
The Christchurch-based company plans to raise $15 million in an initial public offer at $1.50 apiece and a further $12m from existing shareholders as it prepares to list on May 31, and has lodged its prospectus with the Companies Office.
Chief financial officer Rod Garrett told a media briefing the bookbuild was completed last week and was well subscribed, with nine institutional investors set to join the share register. Existing shareholders won't be able to sell their shares until SLI reports its preliminary 2014 annual results.
The level of investor interest is similar to what boutique brewery Moa Group achieved in November last year when it raised just $1m from the public and $15m from institutions.
SLI's float is competing with the government's sell-down of MightyRiverPower and the backdoor listing of the Mad Butcher franchise.
SLI plans to forgo profits in the short to medium term in an international sales drive towards long-term growth. The company forecasts a loss before interest, tax, depreciation and amortisation of $1.9m in the 2013 financial year on sales of $18.3m, widening to an EBITDA loss of $6.9m the following year on revenue of $22.2m.
Mr Garrett said SLI could turn a profit after the forecast period in the prospectus, but that will be a decision for the board to make as to whether it should continue its push for sales growth.
The new funds will be used to nearly double its direct sales and marketing team and pay for its expansion plans into Japan and Brazil where it sees opportunities. About $7.3m of the cash raised will be held for working capital, and about $2.1m is expected to cover the net cost of the listing.
SLI Systems has been set up to acquire SLI Systems Inc, the US business originally set up in Christchurch in 2001 and later bought back from its US owner.
The company cited a change in the algorithms used by major search engines such as Google as a potential risk, with referrals from Site Champion generating 20 per cent of SLI's revenue.
Other risks include intellectual property infringement and protection, and its threat to open source code which SLI uses in some of its products.
The offer opens on May 14, closing on May 28 with a listing scheduled for May 31.