Opportunities Update - June 2014
In our May newsletter - Confidence Continues in Capital Markets - I reported on how the Debt and Capital Markets here were experiencing a rejuvenation of confidence and how that had been confirmed by both lenders and investors becoming more active.
In our May newsletter - Confidence Continues in Capital Markets - I reported on how the Debt and Capital Markets here were experiencing a rejuvenation of confidence and how that had been confirmed by both lenders and investors becoming more active.
Well since then we’ve see more evidence of growing confidence as New Zealand companies line up to list on the buoyant New Zealand NZX and Australian ASX listed sharemarkets.
Last Sunday’s edition of the Sunday Star Times featured an article by Fiona Rotherham - Rich pickings on IPO front - which reports “a veritable avalanche of Kiwi companies cashing in investor interest with initial public offerings on both the New Zealand and Australian sharemarkets.”
The article lists two IPOs which have taken place already this year and 14 others which have been announced or are being considered.
And in this Wednesday’s Herald upcoming IPOs were again in the news, with Financial Markets Authority chief executive Rob Everett saying the floats would deepen New Zealand's capital markets and provide more choice for the investment community.
Funding SMEs
There are however far more companies here which are either too small to ever attract capital through public listing, or are yet to reach a size where this could be an alternative. According to the latest data from Statistics New Zealand, Small and Medium-sized Enterprises SMEs (up to 20 employees) account for:
- 97.2% percent of all enterprises;
- 30.2% of all employees;
- And an estimated 27.8% of New Zealand’s Gross Domestic Product.
Download their fact sheet here.
At TBK Capital it’s our mission to help these businesses attract funds to allow them to start or expand their operations. Our specialty is arranging a suitable mixture of debt and equity funding to provide working capital for growth - and “expertise” through active investor participation. See two of our recent newsletters on this subject Choosing the Best Loan and Lender and Money for Business. If you're looking for funds these are a must read.
For those looking for large expansion of their business early “private” capital raising will ultimately assist businesses to reach the level where they can attract an exit strategy such as a trade sale or “liquid” equity via the NZX, ASX or other listed exchanges. We’re not involved directly in the listed markets but have arrangements with people who are.
So here’s an update on some of the projects we are currently promoting, or which are about to be released. Some were featured in my last newsletter. For further information about these simply reply to this email listing the offers that interest you, or call me on 09 307 3257 or 021 902 901.
Projects - IM shortly to be released
Imersia
Imersia is a New Zealand company which has invented a revolutionary and patentable method of distributing digital and immersive gaming technology content to any location without any hardware infrastructure. Imersia is a mobile-centric, location-aware, engagement platform. Only one app is required. It is to be known as the Reality Browser or Companion application. Its content is accessed via Smartphones and Tablets. Content can be delivered to any location on Earth where there is connectivity.
Brands are competing for attention in competitive markets and relevance matters. Imersia `dials up’ customer engagement resulting in increased market share for brands. It creates a unique new channel between brands and customers that is filtered on a geospatial, temporal and contextual basis. Existing revenue streams include customers such as 20th Century Fox, Westfield, and KiwiYo. The market is truly global and growing extremely quickly, propelled by multiple market and technology trends.
Imersia is the leader in using in-game mobile enticements to reward its clients’ customers for performing real world desired behaviour patterns, for example visiting a specific shop, watching a TV program at a certain time, brand recognition or product purchase. Alex St. John, originator of Microsoft’s DirectX technology is on the team. The patents are in the process of being registered in the USA.
To obtain the level of specification warranted for a revolutionary product of this nature Imersia Group Limited requires $400,000 of new seed capital investment to continue to develop the platform, increase revenue, lodge patents and prepare for the Series A funding round.
They’ve already had a strong expression of interest from one investor for $200,000 who is now undertaking final due diligence. Imersia is ideally seeking one other investor for the balance. If you’re interested reply to this email or give me a call.
Kiwi Rider Limited
Kiwi Rider is a new company formed to introduce a new, spectacular, and very profitable adventure tourism attraction to New Zealand and Australia. Similar businesses are already earning their operators substantial returns in the U.S., Asia, South Africa and throughout Europe.
The equipment central to the operation has been sourced, and a favourable purchase price negotiated with the current sole supplier of this particular product from offshore. The supplier wants to enter the New Zealand and Australian markets and is keen to negotiate a Sole Purchase and Supply Agreement with Kiwi Rider.
The company is raising capital through the issue on 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.
The funds sought will be sufficient to establish its first operation in Rotorua. The business has the potential and aim to produce a return greater than the full investment after the first full year of commercial operation. Accordingly it could then self-fund its expansion throughout New Zealand and in Australia. Further information is available on signing a Confidentiality Agreement.
Capital Growth Fund
In 2010 the Kauri Property Fund, a PIE Capital Growth Fund, was launched to purchase a strategically located property in Auckland which has been identified under the Proposed Unitary Plan as a Transport Orient Development. Many of the initiatives contemplated at that time are already under way.
The value of the property has increased by over 30% since it was bought and is expected to increase significantly more as planning and infrastructure takes place.
A substantial holding in the Fund has become available, details of which are available on signing a Confidentiality Agreement. The minimum investment is $500,000. If this is of interest reply to this email or give me a call.
Luxury Charter Vessel Business
There is an opportunity to invest in a turnkey or lifestyle business opportunity in Auckland’s Viaduct Harbour. The business operates a surveyed 70 foot luxury charter vessel from its sought-after prime location in central Auckland. The vessel is licensed to carry up to 35 guests and 2 crew.
For the period from 3 July 2013 until 10 April 2014, the charter business had a turnover of $90,634 with an estimated surplus of $37,300. The charter business focuses on the corporate sector and has entertained celebrities, UN Ambassadors, and executives from some of the world’s largest corporations. It conducts approximately 15 to 20 charters per year.
Owners of this business could include a buyer who wants;
- a turnkey solution for a charter vessel business and run it as is, or
- to increase the number of charters via more aggressive marketing and reduce the overall costs of ownership even further, or
- a unique apartment on the water during weekdays and the ability to go cruising whenever and wherever they want on weekends.
The business is available for a purchase price of $1,790,000. Interested parties should contact Andrew Larsen on (09) 306-8638 or on email a.larsen@tbkcapital.co.nz.
Dodopuzzle - New Eco-friendly Toy/Puzzle
This is one of the most exciting projects with international appeal we've seen. Already in production here in New Zealand this is a puzzle that becomes a toy and a work of art.
The originators presented at the 2014 Nuremberg International Toy Fair in Germany and are now in discussion with companies from the fair regarding international distribution and manufacturing. The toys produced by dodopuzzle are unique. It is a 3D eco-friendly toy/puzzle made of cardboard, and when completed, looks like art.
The product is currently being supplied in New Zealand at museums, zoos and toy stores, and is also available online. It is patented and undergoing patent pending in all relevant territories worldwide. The owners are already in discussion with companies in U.S. and Asia that want to manufacture dodopuzzle under license.
Dodopuzzle is raising capital by the issue of new ordinary shares to expand to large scale production in New Zealand to supply premium markets including New Zealand, Australia and Japan.
The first round of new shares is $300,000 for 25% of the company. A cornerstone shareholder who would be interested in a seat on the board or an even more active form of participation would be preferred. An IM will be available soon so reply to this email or call me if you’d like a copy.
Exploron - Social Network Aggregator
Allele is a New Zealand based start up developing the Exploron “app” that eliminates the every day hassle of checking in, monitoring and interacting with multiple social networks. It’s aimed at “Socialites” - people heavily active across multiple networks like Facebook and Twitter.
Exploron understands what information across networks is relevant to the user, picking out the best bits that actually matter to them and presenting it in an intuitive visual format. It allows advertisers, brands and local businesses to reach the people that matter.
The company is raising $110,000 for the seed round to build the proof of concept for trial in the Australasian market and will be raising another $350,000 to $400,000 to launch the full-featured app globally. An IM will be available soon so reply to this email or call me if you’d like a copy.
Projects - Update on Current
Retirement Village Expansion
Our client is raising capital to expand an existing retirement village consented for 129 units. 61 villas have already been built, construction commenced on 10 apartments, and the core of the common amenities completed. They also wish to build an aged care facility on adjacent land.
The village has achieved strong sales and the business is run by an experienced management team. This is an opportunity to invest in a sector where the listed entities have experienced significant growth in share value over recent years and to share in the substantial uplift in value as the village grows.
The village is currently owned by three individuals who are ideally seeking one cornerstone shareholder to join them. The offer is $3.45 million for 33% of the company but up to 50% would be considered for the appropriate investor/s. The IM is available now.
Freeflow Pipes Ltd presented at Investor Showcase Luncheons in Auckland in April and in Sydney earlier this month. The feedback from interested parties shows conviction the business will revolutionise the industry here and in Australia, and new expressions of interest have now been received. The IM is available now.
Bizcard
BizCard is a Business to Business charge card targeted at SME customers who typically have an annual spend of $5,000 - $15,000 or less with any given supplier or merchant.
For participating suppliers BizCard provides the solution of a payment method that replaces their monthly SME accounts whilst maintaining a relationship with the SME customers. BizCard removes the billing/administration function, removes debtor management, credit risk and associated costs by taking over purchasing and payment functions.
The founders of BizCard have entered into arrangements with two specialist partners, Finance Now - (a New Zealand finance company whose parent is SBS bank) and Card Systems Malaysia to provide this service to SMEs and their suppliers. Finance Now will take over all credit management and provide extensive credit and finance facilities to the business, including a receivables facility to provide working capital to BizCard if required. The system provided by Card Systems is paid for and installed and will be live later this month.
BizCard is issuing new shares for $600,000 for 54% of the company. The business can proceed with new capital of $350,000 to take the business to market. To date Bizcard has a commitment of $125,000 so only needs a further $225,000 to start operations. The IM is available now.
5th Element – Revolutionary Bionic Hand
This is a start up business which has developed a robotic (“bionic”) prosthetic hand that will better enable amputees to resume their lives with confidence, dignity, and in comfort. The 5EL Hand has been specifically designed to meet the challenges faced by amputees and to overcome the shortcomings of currently available devices to effectively empower amputees to get back on the horse – it is not another me-too device.
Their proof of concept prototype has been validated by leading US clinicians as demonstrating superiority to all other prosthetic devices with regard to reliability and dexterity. The company is raising $750,000 by the issue of new ordinary shares to produce and test pre-production prototypes, and undertake user and clinician trials here and in the U.S. Investment in this Series A round is available now and participants will have pre-emptive rights to partake in the next capital raising round.
A recent presentation in Sydney attracted attention and interest from potential investors. The IM is available now on signing a Confidentiality Agreement.
Engender Technologies
This company grew out of collaboration between Pacific Channel and some physicists at the University of Auckland. See Herald article. On the back of a successful seed funding round in 2011, Engender's scientists have developed key steps to separate male and female bearing sperm cells for the purpose of sex-selective animal breeding in the dairy industry. There is only inadequate technology in the market and the potential economic value of Engender’s development is huge, as gender is the single most important factor in the value of a calf.
Engender expects to announce a successful close to its current $1.25 million equity round within the next few weeks. Participating investors so far include the New Zealand Venture Investment Fund, leading dairy industry figures including large scale dairy farmers and the Chief Operating Officer of a multi-billion dollar ASX-listed technology company. For further information see our website. The IM is available now.
Footfalls & Heartbeats
Footfalls & Heartbeats is a New Zealand start up that has developed a proprietary process for manufacturing smart textiles to improve healthcare and sports performance. See our website for a description of that offer and links to the business.
The Investors in this offer include investors with relevant industry experience – like Dr Gary Pace (San Diego), a Director of Resmed (NYSE: RMD) who has also become a director; Dig Howitt head of manufacturing at Cochlear (ASX:COH); Jeremy Collins, Footfalls’ current Investor Director who sold his electronic lighting technology company to Phillips; Sir Eion Edgar; and a private investor in Australia with a software and textiles background. There is now under $200,000 still available from the aggregate $2,000,000 offered. The IM is available now.
Living Green
The new share offer for this company closed fully subscribed last year and since then it has received significant New Zealand Chinese investment to assist with planned China market sales development. It is continuing to develop sales into a number of New Zealand channels and is about to enter supermarkets here.
The company is now in an interesting growth stage and is looking to finance this expansion by raising $500,000 by way of convertible notes. These will pay 12% per annum and convert in 24 months at the current share price to about 20% of the company. Half of this has already been committed from existing shareholders.
A new CEO, Steve Casper, has been appointed to manage this growth. His previous positions include, Finance Director Manager role with Deutsche Bank ANZ, Head of Business Management at CBA Institutional Banking and Deputy Treasurer at KiwiBank. Steve is an investor in the convertible notes.
This offer will attract investors who have an interest in participating in the growing market world-wide for natural and green home care and personal care products. The new IM is available now.
Happy to hear from you
I’m always happy to hear from you if you’d like to comment on the matters raised in Capital Comment – or of course it you’re looking for 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 or simply by replying to this email.
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None of the above are offers of Securities to the Public and are available only to eligible investors as defined by the Securities Act, or those excluded from the Offer provisions of the Securities 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