Opportunities Update - June 2015
In yesterday's Newsletter I talked about how the rise in house prices gives existing owners more equity in their house and therefore more collateral security when borrowing to purchase other assets. And I gave my view of the 3 major advantages of investing in businesses versus other asset classes like property, listed equities, or art and jewellery.
The businesses we work with in TBK Capital are usually looking to find a key cornerstone shareholder who may be seeking some form of active participation – be it, actually working in the business, a seat on the board of the company, or even a “merger” of their businesses. (Of course "passive" investors are also welcome and can 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.
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 the offers below. Those included in Projects Under Evaluation - at the end of this newsletter - are either about to be mandated or are seeking expressions of interest.
New Offers
K9 Natural Pet Food
The pet care industry is a $90+ billion a year industry, with dog and cat food accounting for 75% of the sales.
K9 Natural sells a natural frozen and freeze dried dog and cat food. The product is a super-premium product that is world leading in regards to natural nutrition and convenience. The business exports to 19 countries globally including North America, Australia, Asia and Europe. Their export markets are strong and growing.
The focus of the business is to provide the best possible nutrition to companion animals of “Pet Parents”. Pet Parents is an industry term referring to the pet owners that treat their pet as one of the family. They are key to the industry as they are driving all the growth globally.
A limited opportunity exists to secure 2,539,824 shares at NZD$ 0.85 per share – representing 13.1% of the company. Investors taking up the full offer will also have a seat on the board – subject to them retaining at least a minimum 10% stake in the company.
Indicative expressions of interest are now being sought. For more information, please contact Alex Smith at alex.smith@tbkcapital.co.nz
Secure Wealth
SecureWealth is a New Zealand company that owns a U.S. based SaaS personal financial service. It provides cloud based personal portfolio products and services.
A user can go online, set up an account and then search and select all of their financial service providers such as bank accounts, credit cards, loans, brokerage accounts, 401k, etc as well as exchange traded investment price data. The transaction and balances data is pulled through to SecureWealth and reproduced as a portfolio, personal balance sheet and budgeting information.
SecureWealth is far more secure than existing browser based online financial products and services. Cyber security is a major issue in the U.S. There have been attacks on financial institutions like JPMorgan Chase and Citibank, as well as retailers like Target and Sears.
This has led to a number of other established online services - with customer bases ranging from around 30,000 members to several million - promoting SecureWealth as a partner. SecureWealth will also market directly to a U.S. database of over 10 million mid to high net worth individuals.
The Company believes modest success would equate to around 100,000 monthly users, generating US$1.5 million revenue per month. Substantial success would be 1 million users over the next 3 years, generating US$15 million of revenue per month. Initial breakeven is expected to be less than 10,000 users per month.
SecureWealth is planning to raise up to $1,200,000 in New Zealand by the issue of new shares in the business. New Zealand resident shareholders own around 15% of the company at present. There are tax and grant advantages of moving to New Zealand; no capital gains tax that some of the U.S. investors may be able to benefit from, and a 28% corporate tax rate versus 39% in the U.S. There is also the potential for grant funding here via Callaghan Innovation for future development projects.
Being a New Zealand entity will not significantly affect the ability of the company to raise capital in the U.S.. from VC investors for example, as the operations of the business will continue to be largely domiciled in the U.S.
The likely exit strategy for investors is a trade sale. As a comparison Intuit acquired Mint for US$170 million at 1 million users in 2009 and Fidelity recently acquired eMoney (similar to SecureWealth but B2B for financial planners with 25,000 planner users) for a rumoured US$300 million plus.
An IM will be available soon. If you’d like a copy reply to this email or give me a call.
Esquires Coffee
Esquires Coffee (“Esquires”) - originally founded in Canada - is a fast growing global coffee house business currently franchising in the U.K., Ireland, Cyprus, Egypt, Saudi Arabia, UAE, Kuwait, Bahrain, China and Indonesia.
Indonesia’s first two stores are due to open in June 2015, and Egypt’s first three stores are due to open in August 2015. The Company currently operates in 71 locations internationally with at least 5 new stores opening by the end of June 2015. The business is forecast to grow to 125 stores by the end of March 2016.
Cooks Global Foods (CFG) owns the intellectual property and master franchising rights to Esquires Coffee Houses worldwide - excluding, New Zealand and Australia. On 18th May 2015, CFG signed a joint venture agreement with Shenzhen-listed retail and property giant BuBuGao (Better Life) Group (BBG) to develop 30 Esquires Coffee stores in the province of Hunan by 2020. For more on GFG’s expansion into China, please click here.
CFG announced on 14 May 2015 that it has agreed an Esquires Coffee master franchise for Egypt in a move that gives a boost to the group’s Middle East expansion plans. See more on GFG’s expansion into Egypt here.
The company is issuing a private investor round of up to NZ$18 million (both in terms of straight equity and mandatory convertible notes) to enable delivery of a five year strategic growth plan focused on both existing and new international markets. For more information, contact Alex Smith at alex.smith@tbkcapital.co.nz
Payport Limited
As online shopping continue to boom, shipping goods out to customer efficiently and getting paid remains a challenge. Payport addresses these problems with two products which can be two standalone products or integrated together. These are;
- an online freight booking aggregator and freight management system,
- and an online credit card payment gateway.
For freight bookings, Payport have entered into partnership agreement with Posthaste, Castle Parcels, and NOW Couriers. This provides a nation-wide service covering 360 cities and towns in New Zealand servicing 99% of the population. Payport also has access to a network of 1,000 couriers, 54 line-haul vehicles and 5 cargo aircraft through their domestic partner network.
Payport also has an exclusive partnership agreement with the New Zealand subsidiary and investment arm of Singapore Post whose investors including NYSE listed Alibaba Group. Through Singapore Post Payport has access to international and domestic carriers such as EMS worldwide, SpeedPost in Singapore and CourierPlease in Australia. Using Singapore as an international hub, freight is are distributed around the world via international postal, mail, courier, sea and air freight services. This enables Payport to provide a full international service covering over 200 countries at very competitive prices.
On the payment side, Payport has entered into a partnership agreement with Paymark, New Zealand’s leading EFTPOS and credit card payments provider.
Payport will partner with some of the leading chain stores and convenience stores in New Zealand. It has developed a Point Of Sale system for use by these stores to provide Parcel services, offering O2O (Online to Offline) and C2C (Consumer to Consumer) services.
Tapping into existing stores is a very economical way for Payport to establish a physical presence very quickly. There is no rental cost, no staffing cost, no utilities cost, and minimal fit out cost. It also gives free point of sale exposure and brand recognition to Payport. The store owners generate extra income from their share of the revenue from the sale of courier services. Payport will also drive foot traffic to their stores. It’s a win-win situation for both the store and Payport.
Payport is scheduled to roll out 30 ”ParcelPort” stores nationwide in 2015, with up to 600 more over the next few years. By comparison NZ Post currently has 880 post shops, 609 of which are host businesses and 138 of which are under agency agreement.
Payport Limited was founded in 2011. It currently has over 200 B2B (Business to Business) and B2C (Business to Consumer) customers with revenues of over $400,000 per annum mainly from domestic parcels. To date most of the growth has been from customer referrals. The compant is now expanding its business by growing the current domestic parcel market and expanding into the international parcel market and the C2C/O2O markets.
The company is inviting investor(s) to join the current shareholders and provide the working capital to continue to grow the B2B and B2C domestic parcel business and launch the new international parcel and C2C parcel businesses.
An IM will be available soon upon signing a confidentiality agreement. For a copy reply to this email or give me a call.
Update on Current Offers
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 health conscious consumer. You may have seen their product range as you shop - they are already in more than 180 retailers here now and also have a presence in Australia. CleanPaleo, and the groups second brand Edenz, are also close to securing distribution in India and China.
Since the previous newsletter, the business has reached agreement with a major supermarket chain to have all CleanPaleo products stocked throughout New Zealand. This rollout is due to commence in 2 months' time. Revenues for the company once completed are expected to be between $200,000 and $400,000 per month.
As a result of this, Ambros Group has secured a $1 million bank facility to support this growth, and to expand the business. Accordingly their Offer to raise share capital has been withdrawn.
Future capital raisings are more likely to be aimed towards a large cornerstone shareholder with international connections, or large food industry companies who want to move into their market sector. If this is of interest please reply to this email or give me a call.
Skin Alive
Skin Alive was established six years ago to develop, market and sell a range of sunscreen products designed for specific markets. An Offer to invest in the business 2 years ago was withdrawn while it examined its range of brands and products for expansion in the international markets. It has now developed formulas specially designed for each specific market with the assistance of its contract manufacturer Jaychem Industries.
These markets now include: Surf, Golf, Snow, Kids, Farmers and Builders. Participants in all these areas spend long hours out in the sun and require quality sunscreen products for protection. Skin Alive has tailored the formulations to suit each specific market. Each product has now undergone extensive field trials and they have achieved:
- The Australia/New Zealand Standard.
- The International Protocol Standard (European Colipa Standard).
- The FDA protocol standard and are registered with U.S. FDA.
- Skin Alive Limited, as a company, is a registered member with the U.S. FDA.
The Skin Alive Brands are now available in the following markets:
- Golfersskin: New Zealand/ U.K. / Scandinavia/ France/ Vietnam/ Hong Kong, China. Skin Alive has also signed a licensing agreement with Sunscreen Sports in the U.S., directed by Kevin Haglof: ex-president of Titleist Asia (9 of the top 12 ranked players in the word use Golfersskin for their sun protection).
- Surfersskin: New Zealand/ France / Spain/ United Kingdom/ Portugal/ South Africa/Brazil
- Snowskin: New Zealand / France
- Kidsskin: New Zealand/ U.K./ Scandinavia
- Farmersskin: New Zealand/ U.K.
- Buildersskin: New Zealand / U.K.
Skin Alive is now in the process of developing a worldwide distribution network. It has been working with distributors in each of the countries above over the last year to address their individual import and customs regulations. It has now obtained market access and approval as well as trade and word marks for its product lines in Europe and in the U.S. Skin Alive’s European Distributor, Murray Steward, of Seabase International, is so confident in the growth he is starting a new company focused on marketing and selling Skin Alive products in the U.K., Scandinavia and Western Europe.
The potential of the Kidsskin Range is enormous. It has interest already from the U.S., China and Brazil. It has been tested in Early Childhood centres over the last 2 years with excellent results and feedback. Skin Alive has a presentation to Countdown in June where they will offer Kidsskin as an “exclusive to Countdown” product for their 170 supermarkets within New Zealand.
With international markets now opened and preliminary orders being received, Skin Alive now requires added investment in order to capitalize on this momentum. They are offering a 20% shareholding in the company for $300,000. They would also consider loan finance to fund stock. If either of these are of interest please reply to this email or give me a call.
MetTrigger
This Offer came out only a few weeks ago. See how this industry works in a more established market.
Since the IM was released, MetTrigger has been concentrating on building its relationships with key strategic partners in the private sector weather industry, and with potential customers in New Zealand interested in more detailed weather data.
They are now only 2 or 3 weeks away from announcing new initiatives. If this business is of interest to you call me or reply to this email and I’ll get back to you under confidentiality as these occur.
Bizcard
BizCard is a Business to Business charge card targeted at SME customers who typically have an annual spend of $5,000 - $15,000 with any given supplier or merchant.
Bizcard will provide significant savings for SME businesses and Bizcard holders will become a part of the Bizcard loyalty program that will provide cardholders with rewards based on their monthly spend.
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 Cardtrend Systems Malaysia to provide this service to SMEs and their suppliers. Finance Now will provide 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 Cardtrend Systems is installed and tested.
The business has 3 major supplier merchants who would like to offer and promote Bizcard as a part of their SME customer offering.
BizCard is issuing new shares for up to $600,000 for 54% of the company. The first round of $350,000 is to take the business to market. To date Bizcard has a commitment of $200,000 so only needs a further $150,000 to start operations. The balance of $300,00 can be subscribed for now or on reaching agreed targets.
Reply to this email or call me for further information.
Projects Under Evaluation
Interactive Advertising for Retail Stores
A revolutionary form of advertising has been developed here in New Zealand that has world-wide application. It harnesses the latest technology available in the market to provide an innovative and creative marketing system for the retail industry.
It uses a sophisticated interactive touch-screen which is a seamless part of the existing storefront. The screen allows dynamic graphics and advertising campaigns to be aired and viewed on the front of a retail area and collects data from passers by that interact with it. Daylight or sun on the screen is not an issue. Their interactive process is unique and the process patented. There are also other systems in place to protect the IP.
Campaigns can be monitored and adapted from a smart phone remotely and sections of a campaign played automatically within a specific time frame. As well as running their own campaigns, the retailer can dictate the share of airtime they deem available for others to use, and earn revenue 24/7 from the advertising they display for those strategic partners. For the advertise it provides exposure from the storefront window display, to any store, shop or mall which has storefront real estate, anywhere in the world.
The owners have considerable experience in the retail and marketing area, and have been working for over two years to perfect the technology and the platform. They are planning to launch in Auckland and Queenstown in the next few months and the rest of New Zealand and globally within the next 2 years.
It produces high quality resolution at an unprecedented level and can be managed remotely to add new campaigns or remove existing ones. Advertisers can use their budget to move from one place to another and analyse success daily.
Deals have been negotiated to finance the hardware for the retailer so that it is affordable to all retailers. The benefits of clean non-cluttered street paths and retail windows, plus the added sophistication of high quality campaigns for retailers large and small, are quite revolutionary.
Further information is available on signing a confidentiality agreement. If you’re interested reply to this email or give me a call.
Health Supplement Export Business
We have a New Zealand born client, living overseas, who has an established health supplement business operating in Japan and the U.S. This business:
- Currently sells direct to over 1000 consumers and business accounts monthly.
- Owns a specialized factory in New Zealand for the production of the key ingredients.
Our client is seeking working capital - either debt or equity - to fund new production to meet growth.
Further information is available on signing a confidentiality agreement. If you’re interested reply to this email 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