Last year was the strongest for initial public offerings on record and the 5 per cent rise in debutante Appen indicates the window for new listings, particularly in the technology sector, remains open at the start of 2015.
Appen, a local technology company in the speech and text recognition field, hit the boards on Wednesday morning at the 50¢ per share offer price. The stock briefly slipped to 48¢ before bouncing back and closing its first session up 5 per cent at 52.5¢.
The flat start represented a solid performance against the backdrop of a 0.2 per cent fall in the ASX All Ordinaries Index on Wednesday, which was down again after losing more than 1.5 per cent on Tuesday amid a global share sell-off.
About 40 per cent of the company was floated as private equity partners Anacacia Capital sold down its stake. Anacacia’s Wattle Fund remains a 4 per cent shareholder. Neither Appen chairman Chris Vonwiller or non-executive director and former CEO Bill Pulver sold any of their shares in the float. Bell Potter acted as lead broker on the deal.
The company was founded in 1996 and today counts the United States government and Microsoft as key clients. In 2013, Appen recorded a $7.5 million profit after tax, adjustments and share payments from revenue of $60 million.
For the six months ended June 30, the company showed an interim net profit of $2.1 million from revenue of $26.9 million. It will report 2014 annual results in February. In addition to Appen’s long history of earnings and profitability, other areas the deal benefited from were exposure to the technology sector and US dollar earnings, Bell Potter head of equity capital markets James Unger said.
“Appen has a high proportion of earnings in US dollars meaning it is a beneficiary of a falling Australian dollar, which is one of the major themes investors are looking for at the moment,” Mr Unger said.
The firm sells highly specialised data-sets that help machines learn to read, write, listen and speak in 150 different languages.
The technology can be applied to everything that happens online, from searching to shopping to spying.
Appen has offices in Sydney, Seattle and San Francisco, plus an operations centre in Islamabad. The group has plans to expand into China.
Its was the second new listing on the ASX in 2015. Shares in the Arowana Australasian Value Opportunities Fund, which floated on Friday, have remained steady at the $1 offer price.
Mr Unger said he expected the IPO pipeline would remain strong in the first half of 2015. “There are some reasonable size deals still coming through, including more technology listings”
The Australian Financial Review