Venture Advisory Monthly Wrap - March 2017

Key Takeaways

SEEK increased its ownership in Online Education Services (OES) from 50% to 80% by investing an additional A$118.5m

EstateMaster Group was acquired by Altus for an undisclosed amount, strengthening the buyers presence in the Middle East and Australia

Snap Inc. closed a successful IPO opening at US$17 per share, which was well above the target price range

Airbnb closed its Series F round of funding bringing its total amount of capital raised to over US$1bn

CA Inc. acquired Veracode, an application security testing company to broaden its development and testing offering for enterprises and app developers

In March 2017, the Australian information technology sector [AXIJ] and the telecommunications sector [AXTJ] were up 0.7% and 3.8%, respectively. The All Ordinaries [AORD] was up 2.7% while the ASX 200 [AXJO] trade up 2.8%

SEEK increased its ownership stake to 80% in Online Education Services, enhancing the job board operators investment in the education sector

Social media turned camera company Snap Inc. went public in a 10x oversubscribed highly anticipated IPO

Telco and ICT Monthly WrapTelco and iCT Best and Worst Monthly performers

TPG Telecom’s share price rose 12% in March, as the company announced net profits were up 11% driven by improved earnings from iiNet

The 5 best and worst performers for the month of March 2017 were as follows:

Key Company Announcements

Vocus (7 Mar 17) sold its cloud collaboration business to West Corporation for an undisclosed purchase price. West Corporation is expected to integrate this business into its Communications Services business segment

Inabox Group (7 Mar 17) acquired Logic Communications, a Perth-based managed IT and cloud service provider, for total consideration of A$1.5m. The transaction will expand Inabox’s presence in the Western Australian market, bringing across a portfolio of 50+ SME clients

Macquarie Telecom (20 Mar 17) -Vocus Group sold its 3,358,511 Macquarie Telecom shares, which represented ~16% of Macquarie Telecom's issued share capital. The shares were sold via a block trade at A$12.20 per share to institutional and retail shareholders. The transaction will increase share liquidity and enhance the diversity of the company’s share register

Spark New Zealand (23 Mar 17) -  In an attempted hostile takeover, Spark New Zealand (Spark) made an offer of NZ$ 0.80 per share to acquire the public shares of Team Talk. In response, to this offer, Team Talk released a company statement recommending shareholders reject Spark's offer

Singtel (27 Mar 17) introduced a real-time mobile remittance service to Indonesia that allows customers in Singapore to send money to Pos Indonesia's 4,500 cash-out points across the country via Weselpos Instan. The service was launched with the help of Telkomsel

Speedcast (30 Mar 17) reported a 30.1% YoY increase in FY16 revenue to US$218m and 3.6% YoY increase in net profit to US$5.9m. It also declared a dividend of A$0.024 per share for the period. The group expects stabilisation in the energy sector, continued growth trends in Maritime and diversification in EEM to drive revenues in 2017

Bulletproof Group (17 Mar 17) announced resignation of Mark Rainbird as the Chief Operating Officer

Melbourne IT (20 Mar 17) appointed Stuart Bland as CFO of the company

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading telco and ICT stocks at the end of the month is as follows:

Telecom stocks were trading on an average forward EV / EBITDA of 9.7x and a median forward EV / EBITDA of 8.3x

Media Monthly WrapMedia Best and Worst monthly performers

In Media, Village Roadshow share price bounced back 20% over the month after a significant drop following the Dreamworld incident

The 5 best and worst performers for the month of March 2017 were as follows:

Key Company Announcements

News Corp (6 Mar 17) due to difference in timing and operating procedures on the ASX and American stock exchanges, there is potential for inequalities between shareholders on each exchange. News Corp has sought and been granted a waiver of the ASX Settlement Operating Rules to avoid such inequalities

oOh!Media (10 Mar 17) - ACCC rescheduled the provisional date for the announcement of its decision pertaining to APO and OML’s proposed merger to 4 May 17

Australian Football League (19 Mar 17) has signed a new deal with Snap to produce “Our Stories” through the 2017 season following a one-off partnership at last year’s grand finals

n/a (20 Mar 17) - The Media Reform bill is facing delays as crossbenchers are not willing to strike a deal on key proposals. The bill includes removing rules such as the “2 out of 3” and “”Reach” rules. The government will not process the bill further until the matter is sorted

Sky Network Television (22 Mar 17) and Vodafone filed an appeal in the High Court against New Zealand Commerce Commission's decision to not clear the proposed merger of the two companies

Southern Cross Media Group (28 Mar 17) announced the company had reached an agreement with WIN Corporation for sale of northern NSW's television assets and operations for a price of A$55m

Nine Entertainment (7 Mar 17) announced the appointment of Samantha Lewis as a Non-Executive Independent

APN News & Media (9 Mar 17) announced Tony Kendall's appointment for a newly created APN Group Role as Chief Revenue Officer. Rob Atkinson, CEO of Adhsel was appointed as the CEO of APN Group and Mike Tyquin will now become the CEO of Adshel. Further, Justin Stone was appointed as a director in the newly created business development team and Emma Hogan joined the company as Chief People Officer

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading media stocks at the end of the month is as follows:

Media stocks were trading on an average forward EV / EBITDA of 9.1x and a median forward EV / EBITDA of 7.7x

Technology Monthly WrapTechnology Best and Worst monthly performers

Touted as one of Australia’s most shorted stock, Melbourne-based software provider Aconex traded up 15% in March

The 5 best and worst performers for the month of March 2017 were as follows:

Key company announcements

Snap (2 Mar 17) - Social media turned camera company Snap entered the public market, raising ~US$3.4bn with an opening market capitalisation of ~$33bn. The deal was 10x oversubscribed in a listing panned for its issuance of strictly non-voting shares

Afterpay (10 Mar 17) announced a partnership with Big Commerce, a global e-commerce platform allowing 100,000 active online global merchants to access Afterpay's 'Buy now, receive now, pay later' service. Afterpay is strategically increasing its presence in SMB merchant space and partnerships like these are well-aligned with this growth strategy

iSelect (15 Mar 17) concluded the share repurchase program under which it had announced to repurchase up to 25,500,000 shares, representing 10.1% of its issued share capital. The repurchase program was a capital management initiative by the company and the purchases were made at the market price

Reckon (17 Mar 17) proposed to spin-off the Document Management segment (representing approximately 15% of 2016's turnover) into an independent company along with listing the shares on the LSE’s AIM Market

SEEK (20 Mar 17) increased ownership in Online Education Services (OES) from 50% to 80% by investing an additional A$118.5m. The transaction will enable OES to secure multiple education partners and expand its market

Square Peg Capital (21 Mar 17) successfully raised A$243m for its debut fund. Australian superannuation fund Hostplus was the largest partner, contributing A$50m to the fund credited as an early investor in companies such as Uber and Stripe

Integrated Research (28 Mar 17) prognosis for UC will support Microsoft Skype for Business Online platform. This will provide better visibility into the level of quality over conferences and make it possible to identify issues that might affect the performance of Skype's platforms

iSelect (15 Mar 17) announced retirement of Damien Waller co-founder of the company

iSentia (23 Mar 17) announced the resignation of Nimesh Shah as CFO and Company Secretary

Forward EV / EBITDA Multiples Chart

The forward EV / EBITDA multiples for leading technology stocks at the end of the month is as follows:

Technology stocks were trading on an average forward EV / EBITDA of 12.0x and a median forward EV / EBITDA of 10.3x

Reference stocks

Our reference portfolio is as follows:

Telecom Stocks:

amaysim Australia Ltd. (AYS-AU), Bulletproof Group Limited (BPF-AU), Chorus Limited (CNU-NZ), Inabox Group Ltd. (IAB-AU), Macquarie Telecom Group Limited (MAQ-AU), MNF Group Limited (MNF-AU), Nextdc Limited (NXT-AU), SpeedCast International Ltd (SDA-AU), Superloop Ltd. (SLC-AU), Spark New Zealand Limited (SPK-NZ), Telstra Corporation Limited (TLS-AU), TPG Telecom Limited (TPM-AU), Vocus Group Limited (VOC-AU), Singapore Telecommunications Limited (Z74-SG)

Media Stocks:

APN Outdoor Group Ltd. (APO-AU), Carsales.Com Limited (CAR-AU), Domain Holdings Australia Ltd. (DHG-AU), Asia Pacific Digital Limited (DIG-AU), Event Hospitality & Entertainment Ltd. (EVT-AU), Fairfax Media Limited (FXJ-AU), HT&E Ltd (HT1-AU), iCar Asia Ltd. (ICQ-AU), Macquarie Media Limited (MRN-AU), Nine Entertainment Co. Holdings Pty Ltd. (NEC-AU), News Corporation Shs B Chess Depository Interests repr 1 Sh (NWS-AU), oOh media Ltd (OML-AU), Pacific Star Network Limited (PNW-AU), Prime Media Group Limited (PRT-AU), REA Group Ltd (REA-AU), Seek Limited (SEK-AU), SKY Network Television Limited (SKT-AU), Seven West Media Limited (SWM-AU), Southern Cross Media Group Limited (SXL-AU), Trade Me Group Limited (TME-NZ), Village Roadshow Limited (VRL-AU), WPP AUNZ Limited (WPP-AU)

Tech Stocks:

3P Learning Ltd. (3PL-AU), Aconex Ltd (ACX-AU), Altiumc (ALU-AU), Afterpay Touch Group Ltd. (APT-AU), Appen Ltd. (APX-AU), Big Un Limited (BIG-AU), Bravura Solutions Limited (BVS-AU), Catapult Group International Ltd. (CAT-AU), Citadel Group Ltd. (CGL-AU), Class Ltd. (CL1-AU), Crowd Mobile Limited (CM8-AU), Computershare Limited (CPU-AU), Data#3 Limited. (DTL-AU), DWS Limited (DWS-AU), ELMO Software Ltd. (ELO-AU), GetSwift Ltd. (GSW-AU), Gentrack Group Ltd (GTK-NZ), Hansen Technologies Limited (HSN-AU), Infomedia Ltd (IFM-AU), IRESS Limited (IRE-AU), Integrated Research Limited (IRI-AU), iSentia Group Limited (ISD-AU), Kogan.com Ltd. (KGN-AU), Link Administration Holdings Ltd. (LNK-AU), Impelus Ltd (MBE-AU), Melbourne IT Ltd (MLB-AU), Megaport Ltd. (MP1-AU), MYOB Group Ltd. (MYO-AU), Nearmap Ltd. (NEA-AU), Netwealth Group Ltd. (NWL-AU), Nextdc Limited (NXT-AU), OFX Group Ltd. (OFX-AU), Pro Medicus Limited (PME-AU), Pushpay Holdings Ltd (PPH-NZ), Reckon Limited (RKN-AU), Technology One Limited (TNE-AU), Webjet Limited (WEB-AU), Wisetech Global Ltd. (WTC-AU), Xero Limited (XRO-NZ), Zip Co Ltd. (ZML-AU)

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