From Rock Star to Goldilocks Economy
What an unbelievably good round of weather we’ve experienced in New Zealand since the start of the year. Even cyclone Pam lost strength before it hit here and kept respectfully East enough to really only affect the East coast up North and around Gisborne and Hawkes Bay.
One of these nights
One of these crazy old nights
We're gonna find out
Pretty mama
What turns on your lights
The Eagles - One of these nights recorded live - Christchurch 26 November 1995
What an unbelievably good round of weather we’ve experienced in New Zealand since the start of the year. Even cyclone Pam lost strength before it hit here and kept respectfully East enough to really only affect the East coast up North and around Gisborne and Hawkes Bay.
Well that’s not the only good news - certainly if you’re an owner of a house or a business.
Property Market Remains Strong
The residential property market is a key indicator of confidence in the economy and house prices continue to be strong. Articles in interest.co.nz show there is more caution in Auckland - as the price increases there have been quite phenomenal - but prices are “catching up” elsewhere.
And it’s not just the residential property market. New Zealand's biggest private property developer, Mansons TCLM, is planning three big new Auckland office blocks worth $220 million.
An article in the Herald this week reported Culum Manson saying demand for new low-rise green-star rated office blocks with vast floor plates was so strong that the business would put up the buildings around the fringe of the CBD. The work could revitalise areas of the city, particularly around the City Works Depot, Parnell's warehouses and perhaps Mills Lane in the CBD where Mansons will redevelop the NZME site between Albert St and Wyndham St.
New “Norm” for Business
The rise in house prices gives owners more equity for no effort and more collateral security when borrowing for business – be it for expansion or acquisition. And at TBK Capital we’re getting more requests to arrange loan finance for both property and business.
At our sister company Tabak Business Sales they’re seeing more confidence in the economy - and in business as results continued to improve through 2014 into this calendar year. There will be many smiling faces in the next month or so as SMEs prepare their 31 March financial year’s accounts.
We see the last two years of growth setting a new “norm” and results that will give business owners more confidence about offering them for sale or raising new capital on the back of stronger EBITDAs.
From Rock Star to Goldilocks Economy
As further evidence of the strong economy I was pleased to read a recent article by Stephen Lowe and Joshua Pringle of Chapman Tripp in which they have the view that the current “Goldilocks” economy is just right for our capital markets.
Their pick is “for the IPO pipeline to keep pumping this year, particularly in the mid-market, and for increased M&A action. The current strength of both the M&A and equity markets means dual-track processes could also feature, where an IPO and a trade or private equity sale are pursued simultaneously.”
They also see this year - being the first full year of implementation for the Financial Markets Conduct Act coming into effect – resulting in fundamental changes to many different types of equity capital market transactions including IPOs. This is an excellent article and well worth reading.
Cornerstone Shareholders
TBK Capital is a “wholesale” broker and the new Financial Markets Conduct Act widens the requirements for the wholesale investor exception and therefore the ability to partake in the Offers TBK Capital make available. To read these see our website.
The businesses we work with are usually looking to find a key cornerstone shareholder who also may be seeking some form of active participation – be that a seat on the board of the company or a “merger”. Of course "passive" investors who qualify under the Act are welcome and form a vital part of the shareholder structure of a company.
For those looking for large expansion of their business early “private” capital raising in this manner will ultimately assist businesses to reach the level where they can raise further capital and attract an exit strategy such as a trade sale or “liquid” equity via the NZX, ASX or other listed exchanges.
So here’s an update on some of the projects we are currently promoting. TBK Capital has been mandated to raise capital for all of these.
New Offers
YesShop Limited is a New Zealand company 100% owned by KD Media Inc, a listed company in Korea. Its strategy is to apply the proven and extremely successful Korean Home Shopping Model to New Zealand. The new Free Trade Agreement with Korea creates opportunities for YesShop and it is about to partner with one of the largest Korean retailers to facilitate trade between New Zealand and Asia.
YesShop is like a department store that retails on TV, the Web, Mobiles and Direct Mail media. It has been gaining customers since its first broadcast in New Zealand in 2013. It broadcasts 24/7 here on Channels 23 on SkyTV and 21 on Freeview. It attracts customers to its website, www.yesshop.co.nz, its mobile site, m.yesshop.co.nz, and toll free at 0800 55 22 33. Each TV segment is produced in its four-stage, 280 square metre studio in Grafton, Auckland.
Its wholesale and exports businesses have been growing and KD Media Inc - which has been funding the company until now - wishes to expand the number of Yes Shop’s shareholders in advance of a possible initial public offering (IPO) in New Zealand.
Highlights of the business include:
- Online spending is the fastest-growing segment of the New Zealand retail sector.
- YesShop has released a new interactive smart phone app.
- YesShop sources goods from more than 100 vendors who sell on consignment, creating positive working capital for Yes Shop.
- YesShop combines existing Yes Distribution and high growth Yes Retail businesses.
- Repeat customers are approximately 36% and growing.
- Revenues were $6.2 million in 2014 and are forecast to be $13.8 million in 2015 and $24.0 million in 2016.
YesShop is raising a minimum of $2 million and up to $5 million by private placement. An IM is available now. If you’re interested reply to this newsletter or give me a call.
Crank Finance Holdings Limited, trading as Moola, is a digital online lender based in Christchurch. The Company has developed software technology which enables customers throughout New Zealand to borrow small cash advances online which are paid out within 60 minutes and automatically repaid on the due date.
What Moola does is pretty straightforward. It provides fast little loans online for people who need cash before their next payday. It takes the sting out of urgent bills, like car repairs or doctor’s fees, and can help with the fun stuff too, like fast selling concert tickets or deals on cheap flights.
Loans range from $50 - $500 over 2 - 31 days. First and second time borrowers can get a maximum of $300, repeat borrowers up to $500 as long as income is sufficient to service the loan.
Customers can use the sliders on the homepage to work out how much they want, when they can pay it back and what the whole loan will cost all up. There are no hidden fees.
It is a government registered financial service provider. Since launching in 2013 Moola has completed over 6,500 loans and created a successful and hugely scalable business model. The founder and CEO, Edward Recordon, has over 10 years’ experience in the finance sector, most notably founding what is now New Zealand’s largest online lender SaveMyBacon in 2009.
Moola’s core intellectual property is the bespoke software and web interface that allows Moola to provide fast little loans online with lightning speed, convenience, flexibility and complete transparency.
Having proved itself the business is now ready for expansion. It is offering a cornerstone shareholding in the company for a mixture of equity and secured debt.
An IM will be available soon. If you’re interested reply to this newsletter or give me a call.
Update on Current Offers
As the well documented decline in "traditional media" advertising revenues continues, the effectiveness of the “Out of Home”’ advertising market is gaining year on year popularity with both clients and media agencies. But New Zealand as an international market for Out of Home advertising has been overlooked due to the small size of our population.
iSEE Digital has been in business since 2012 and is now seeking working capital to fund its expansion plans and dominate the New Zealand market. See the offer on our website.
Since this summary was written the following has taken place.
- They are rolling out to a new network vertical called iSEE Convenience. They have over 230 new locations nationwide they are working with now to arrange install times.
- They are working with a number of other liquor chains which would add another 240 locations in addition to the ones they already have which would give them more than 560 locations, or 60% of the bottle store market in the country.
- They are working with some new fuel chains which will bring approximately 200 new stores online in addition to the locations they have yet to bring on line, so a total of 400 stations could be available.
- A new national grocery chain is on board bringing another 40 stores.
- They have just negotiated a deal with a national telco to provide their stores with an unlimited data internet plan which is about a third of the cost they pay now. This is yet another bonus for the stores and allows iSEE Digital to utilise the network connection for their own systems.
- Their corporate sales division has employed a full time Agency Liaison whose job is to liaise with agencies and governmental contacts in Wellington.
- They have a corporate deal they are presenting worth $50,000 per month on an initial 36 month contract on the current 250 screen network.
- They have just met with a national client who is looking at taking an exclusive position on the iSEE network as a Cornerstone client in a deal that’s worth more than $1 million over 36 months on the existing network sites.
- They are in the middle of looking at alternatives to the media units they currently use which could see a considerable reduction in equipment costs.
Business confirmed to date would bring iSEE Digital to a total of over 1,380 screens installed around the country. The anticipated income from screens alone at that stage would be in excess of $350,000 per month.
An IM is available now. If you’re interested reply to this newsletter or give me a call.
Ambros Group
CleanPaleo is a wholly owned subsidiary of Ambros Group Limited, a New Zealand company which specialises in the manufacture and supply of packaged foods that cater to the Paleo lifestyle. You may have seen their product range as you shop - they are already in more than 150 retailers now.
The CleanPaleo business has shown unprecedented growth in the food industry, and after trading for only 24 months, is already being stocked in gourmet supermarkets, pharmacies, and health/organic food stores here in New Zealand and Australia.
A summary of the IM can be seen on our website. . Since this was prepared they have:
- Confirmed their product range in a major New Zealand Supermarket Chain.
- Finalised supply to Nosh Gourmet Chain.
- Begun supplying their Second Australian Distributor.
- Both Australian Distributors have taken the newly released Coconut Fruit Snacks.
- Begun stocking a New Zealand Gym Chain.
- Received an intention of a first order from a Chinese Supermarket chain worth $500,000.
- Have begun discussions with a group based in California who have distributed and marketed major worldwide brands into the U.S. (Red Bull and Monster Energy).
Ambros Group Ltd is looking to raise capital to finance its global expansion. The first capital raising is to finance expansion in the Australasian market. It will be used to:
- Purchase and manufacture the required stock to meet current and future orders for CleanPaleo.
- Complete the research and development of their desired CleanPaleo product range.
- Effectively market their CleanPaleo brand and products for extended launch into Australia and Asia.
A cornerstone shareholder would be offered a seat on the board of directors of Ambros Group Ltd.
Subsequent capital raisings will be in several stages to launch entry into the other global markets. We expect these to be of interest to corporate or institutional investors and the current shareholders of Ambros recognise they could end up with a minority interest in the holding company.
An IM is available now. If you’re interested reply to this newsletter or give me a call.
Kiwi Rider Limited
Kiwi Rider is a company formed to introduce a new, spectacular, and very profitable adventure tourism attraction to New Zealand, Australia and possibly Asia. Similar businesses are already earning their operators substantial returns in the U.S., South Africa and throughout Europe.
The equipment central to the operation has been sourced, and a favourable purchase price negotiated with the U.S. based sole supplier of this particular product.
Kiwi rider is currently working with the Civil Aviation Authority here in New Zealand to finalise its categorisation as an amusement ride.
The company is raising capital through the issue of new ordinary shares for 74% of the company. The other 26% will be owned by the founder, who is experienced in setting up Bungy Jump operations overseas, and will manage the operation.
An IM giving the background is available now. This will be updated following the CAA category confirmation. But if you’re interested in this offer you should reply to this newsletter or give me a call.
Happy to hear from you
I’m always happy to hear from you if you’d like to comment on the matters raised in our newsletters – or of course it you’re looking to raise debt or equity for business or property or would like to invest in either.
The best way to keep in contact is to phone me on +64 9 307 3257 or +64 21 902 901, or simply email.
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None of the above are offers of financial products that require disclosure under the Financial Markets Conduct Act 2013 (Act) and are available only to wholesale investors as defined by that Act. They are intended for distribution only to selected people to whom, under the relevant laws, they can be lawfully distributed. They cannot be distributed in any other jurisdiction, or to any other people. They are not offers or solicitations in any jurisdiction in which such offers or solicitations are not authorised, or in which the person making such offers or solicitations are not qualified to do so, or to any person to whom it is unlawful to make such offers or solicitations. Any representation to the contrary would be unlawful. No action has been taken by any person that would permit a public offering in any jurisdiction where action for that purpose would be required.
Cheers
JP
John Paine B.Sc., Dip BIA
TBK Capital Limited
Level 15, BDO Building
120 Albert Street
Auckland 1010, New Zealand
Phone +64 9 307 3257
Fax +64 9 309 4519
Mobile +64 21 902 901
Email john.paine@tbkcapital.co.nz